I 


MASTER 

NEGATIVE 
NO.  95-82341 -9 


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Author: 

Rhode  Island. 

Title: 

Special  report  of  the 
Board  of  Tax... 

Place: 

Providence 

Date: 

1916 


MASTER  NEGATIVE  « 

COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


ORIGINAL  MATERIAL  AS  FILMED  -  EXISTING  BIBLIOGRAPHIC  RECORD 


BUS INCSe 

653 
R34 


Bhode  Island.  Board  of  tax  commissioners. 

...  Special  report  of  the  Board  of  tax  commissioners, 
made  to  the  governor,  on  new  sources  of  revenue,  Jan- 
uary 1,  1916  ...  Providence,  E.  L.  Freeman  co.,  state 
printers,  1916. 

68  p.  incl.  tables.  23*". 

At  licad  of  title:  State  of  Rhode  Island  and  Providence  plantations. 

Inheritance  tax. — Franchise  and  minimum  corporatimi  tax. — Tax  on 
savings  deposits  in  national  banks. 

1.  Taxation— Rhode  Island.  2.  Inheritance  and  transfer  tax— Rhode 
IsiandT  3.  Corporations  —  Rhode  Island.  4.  Corporations  Taxation. 
I.  Title. 


Library  of  Conercss  IIJ2431JV7  1916 


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SPECIAL  REPORT 


Board  of  Tax  Commissioners 


MADE  TO  THS 


GOVERNOR 


ON 


NEW  SOURCES  OF  REVENUE 

^  ^  171916 


Inheritance  Tax 
^  Franchise  and  Mlnfanum  Corporation  Tax 
^^'ax  on  Savings  Deposits  in  National  Banlcs 


PROVIDBNCE: 
I*.  VBSncAN  cOk,  nM  ^mnam 
1910 


DG55  R3^ 


LIBRARY 


School  of  Business 


MAY  -  I 


l^tatt  of  Slfoile  jBland  and  Providnirr  yiantatimu 


SPECIAL  REPORT 

OF  THS 

Board  of  Tax  Commissioners 

MADE  TO  THE 


GOVERNOR 

ON 


NEW  SOURCES  OF  REVENUE 


Japuary  J,  1916 


•  •  •  « 


«  J-   >»'  >4 

*       '       »    4  »   •  »        •  • 


Inheritance  Tax 

Franchise  and  Minimum  Corporation  Tax 

Tax  on.  Savings  Deposits  in  National  Banks 


PROVIDE  NCE : 

B.  L.  PBBBMAN  GO.,  8TATB  PBINTBHS 
1916 


\ 


STATE  OF  RHODE  ISLAND  AID  PROYIDEICE  PLAKTATIOIS. 


SCUnVB  CHAMBI^ 


Sbftbmbeb  29,  1915. 

BoABD  ov  Tax  Ck^maasioNsits, 
Suae  House, 

Promdencef  R.  I. 

Gentlemen: — In  the  annual  report  which  your  department  is  required  by  law 
to  make  to  the  Governor  for  presentation  to  the  General  Assembly,  I  would 
request  that  the  question  of  increased  levenueis  for  the  State  be  given  special 
attention.  I  make  tiiis  suggeetioii  in  view  of  the  increasing  demands  upon  the 
General  Treasuiy  due  to  the  growth  of  the  State's  activities,  and  the  necessity 
for  guarding  against  the  impairmrat  of  the  efficiency  of  the  various  departments 
through  the  failure  of  the  State  f  unds  to  meet  tho  rcquiregaepts  of  the  situation. 

I  trust  your  Board  will  not  confine  itself  entirdy  to  leoOfmendations  for  the 
better  assessment  and  odiectiofi  W  tasiei  \)i4<ir^<^^  but  that  it  will 

also  indicate  such  new  sources  of  rev«nue*a8  wffl'yidd  -the  destred  increase,  tend  to 
more  equitable  distribution  of  the. tax,  burden,  and  be  in  lire  with  the  logical 
development  of  the  system  of  ta^patipA  iDausur?*t<ed  with  the  enactment  of  the 
Tax  Act  of  1912. 

I  also  suggest,  if  there  is  sufficimt  time  at  your  disposal,  that  your  Board  outline 
some  method  or  methods  for  providing  the  General  Assembly,  early  in  the  session 
and  in  convenient  form,  with  information  regarding  the  receipts  and  disburse- 
ments of  the  various  State  Departments. 

Very  truly  yours, 

R.  LIVINGSTON  BEECEMAN, 

Governor. 


J  653 


SPECIAL  REPORT  ON  NEW  SOURCES  OF 

REVENUE. 


In  compliance  with  the  request  of  your  Excellency  transmitted 
to  this  Board  September  29th,  1915,  the  following  is  respectfully 
submitted: 

Means  for  Raising  Revenue. 

There  are  two  means  by  which  the  revenue  of  the  state  may  be 
readily  increased.  The  first  and  more  important  is  the  development 
of  new  sources  of  revenue;  the  second  is  by  an  increase  in  the  rates 
of  taxation  on  property  already  assessed,  or  an  increase  in  franchise 
taxes,  license  fees  and  other  charges  made  by  the  state  for  service  or 
privilege. 

The  manifest  advantage  in  suppljdng  additional  revenue  by  the 
development  of  new  sources  is  that  it  results  in  a  wider  distribution 

of  the  burden  of  taxation,  thus  tending  to  equalization,  and  mini- 
mizes, or  may  relieve  entirely,  the  necessity  of  increasing  rates  on 
property  or  privilege  which  is  and  has  been  contributing  to  the 
support  of  the  state,  to  which  the  taxpayers  have  become  accus- 
tomed and  to  which  they  have  adjusted  themselves  and  their 
business. 

It  is  the  opinion  of  the  Board  that  there  are  available  three  sources 
of  revenue  which  should  be  developed  before  any  general  or  per- 
manent increase  of  rates  is  resorted  to. 

Inh^tance  Tax. 

In  a  consideration  of  the  available  sources  of  revenue  for  this  state 
a  tax  on  transfers  by  will  or  the  intestate  laws,  the  inheritance  tax, 
so-called,  is  unquestionably  the  most  important  and  demands  &:st 


4 


BSPOBT  OF  BOABD  OF  TAX  COMMISSIONEBS. 


attention,  because  it  is  a  necessary  part  of  a  well  balanced  state 
revenue  system,  particularly  if  the  system  is  based  upon  the  general 
property  tax  theory,  and  because  of  the  amount  of  revenue  which 
may  be  obtained  readily  and  economically  without  disturbing 
business,  and  also  because  the  inhmtanoe  tax  is  approved  by  econo- 
mists and  administrators  generally. 

Attitude  id  Eccmomists  and  Courts. 

Quotations  from  authorities  passing  favorable  comitoent  on  the 

inheritance  tax  as  a  just,  convenient  and  proper  means  of  providing 
state  revenue  could  be  carried  to  aknost  any  length.  While  there 
are  of  course  condderable  differences  of  opinion  as  to  the  reasons 
for,  and  the  methods  to  be  employed  in,  imposing  the  tax,  there 
is  a  marked  degree  of  agreement  as  to  the  justice^  practicability 
and  economic  soundness  of  this  method  of  taxation.  A  few  quota- 
tions are  given  as  of  possible  interest  in  this  connection: 

"Fhmly  intrenched  in  a  long  and  honorable  history,  with  the 
endorsement  of  the  leading  economists  of  ancient  and  modern  times, 
and  approved  by  the  present  practice  of  most  civilized  governments, 
he  would  be  indeed  brave  who  should  attempt  to  attack  the  theory 
or  validity  of  any  sane  inheritance  tax  from  an  economic  standpoint. " 
(The  Inheritance  Tax  Law,  Blakemore  and  Bancroft) . 

"Modern  states,  more  particularly  in  recent  years,  have  largely 
developed  the  system  with  varied  scales  and  grades  of  duty,  so  that 
it  has  come  to  be  ahnost  universally  regarded  as  an  essential  constitu- 
ent in  any  well  arranged  scheme  of  finance,  and  seems  to  be  equally 
approved  by  popular  sentfanent  and  by  the  larger  part  of  scientific 
opinion. "    (Public  Fmance,  p.  591 ,  Bastable) . 

"The  inheritance  tax  to-day  scarcely  needs  defence.  It  is  found 
in  ahnost  every  country;  and  the  more  democratic  the  country,  the 
more  developed  is  the  tax. "   (Essays  on  Taxation,  p.  133,  Seligman) . 

"  •  •  •  but  after  all  due  allowance  has  been  made,  there  is 
still  left  a  broad  field  for  an  inheritance  tax  of  undoubted  equity  and 
expediency,  as  is  proven  by  the  testimony  of  all  existing  systems  of 
tax  legislation  (in  other  words,  all  convictions  as  to  equity  handed 


*BBPOBT  OF  BOABD  OF  TAX  COMMISSIONBBS.  5 

down  from  the  past), 'as  also  by  cogent  arguments  of  policy  both  as 

regards  taxation  simply  and  as  regards  social  expediency."  (The 
Science  of  Finance,  p.  560,  Cohn). 

"A  defence  of  the  taxation  of  inheritances  is  superfluous.  Its 

existence  in  all  but  a  few  of  the  civilized  nations  and  in  all  but  a  few 
of  the  more  backward  states  is  its  chief  defence."  "The  modern 
inheritance  tax  is  the  spontaneous  product  of  democracy."  (Pro- 
ceedings First  National  Tax  Conference,  pp.  211,  220,  Prof.  Joseph 
H.  Underwood). 

It  would  be  a  task  of  no  little  difficulty  to  find  a  recent  report  by 
any  regular  or  special  commission  upon  the  subject  of  state  revenue 
which  did  not  approve  unqualifiedly  some  form  of  inheritance  tax- 
ation as  a  part  of  the  fiscal  system. 

The  power  of  the  state  to  regulate  and  even  prohibit  the  devolution 
of  property  upon  the  death  of  the  owner  has  been  the  subject  of 
much  discussion.  The  right  of  inheritance  is  considered  by  some  to 
be  a  natural  right,  and  while  the  right  of  the  state  to  regulate  inherit- 
ances is  not  denied  it  is  affirmed  that  the  state  cannot  abolish  the 
right  of  sucoessbn  by  uiheritance  or  bequest  entirely. 

David  MacGregor  Means  (The  Methods  of  Taxation,  p.  215) 
sustains  the  idea  t^hat  the  right  of  inheritance  is  a  natural  right, 
and  claims  that  the  rulings  of  courts  to  the  contrary  are  based 
upon  a  restricted  view  of  the  doctrine  of  natural  rights.   He  says : 

"  So  far  as  conmion  usage  is  concerned,  it  cannot  be  denied  that 
men  speak  of  the  natural  right  of  widows  and  children  to  retain  the 
house  and  goods,  the  title  to  which  was  vested  in  the  dead  father, 

but  the  acquisition  of  which  may  have  been  accomplished  through 
the  combined  labors  of  all  the  members  of  the  family.  Historically, 
as  we  have  seen,  family,  rather  than  individual,  ownership  prevailed 
in  early  time,  and  if  we  use  the  term  'natural'  as  meaning  what 
has  been  customary,  it  can  hardly  be  denied  that  the  surviving 
members  of  a  family  have  a  natural  right  of  inheritance.  Nor, 
within  certain  limits,  does  the  result  seem  different  if  the  tenn  is 
used  in  the  sense  of  what  ought  justly  to  be;  for  it  seems  impossible 
to  disregard  the  claims  of  widows  and  children." 


6 


BBPOBT  OF  BOABD  OF  TAX  COMMISSIONXBB. 


Continuing  he  argues  that  the  inheritance  tax  is  not  a  tax  on  the 
transfer  of  property,  but  on  the  property  itself,  and  objects  to  it  on 
both  social  and  economic  grounds. 

"The  general  consent  of  the  most  enlightened  nations  has  from 
the  earnest  historical  period  recognized  a  natural  ri^t  m  children 
to  inherit  the  property  of  their  parents. "    (United  States  vs.  Perkins 
•  163  U.  S.  625). 

The  Supreme  Court  of  Wisconsm,  as  quoted  in  "The  Inheritance 
Tax  Law'*  (p.  27,  Blakemore  and  Bancroft): 

"So  clear  does  it  seem  to  us  from  the  historical  point  of  view  that 
the  right  to  take  property  by  inheritance  or  will  has  existed  in  some 
form  among  civilized  nations  from  the  time  when  the  memory  of 
man  runneth  not  to  the  contrary,  and  so  conclusive  seems  the  argu- 
ment that  these  rights  are  a  part  of  the  mherent  rights  which  govern- 
ments, under  our  conception,  are  established  to  conserve,  that  we  feel 
entkely  justified  in  rejecting  the  dictum  so  frequently  asserted  by 
such  a  vast  array  of  courts  that  these  rights  are  purely  statutory  and 
may  be  wholly  taken  away  by  the  legislature. 

"It  is  true  that  these  rights  are  subject  to  reasonable  regulation 
by  the  legislature;   .   .  . 

Contmumg,  these  authors  comment :  ''We  venture  to  suggest  that 
the  attitude  of  the  majority  of  our  courts  is  more  historical  than 
sensible,  that  no  court  in  this  country  has  ever  actually  upheld  the 
state  m  appropriating  aU  the  property  of  a  decedent  for  taxation, 
and  ifire  doubt  if  any  court  ever  will  approve  of  such  an  outrage  in 
time  of  peace." 

The  opposite  view,  that  the  right  of  inheritance  is  not  a  natural 
but  a  civil  right,  seems  to  be  sustained  by  the  weight  of  legal  opinion 
and  to  have  the  best  historical  foundation. 

"The  right  of  inheritance,  or  descent  to  children  and  relations  of 
the  deceased,  seems  to  have  been  allowed  much  earlier  than  the  right 
of  devising  by  testament.  We  are  apt  to  conceive  at  firet  view  that 
it  has  nature  on  its  side;  yet  we  often  mistake  for  nature  what  we 
find  estabhshed  by  long  and  inveterate  custom.  It  is  certamly  a  wise 
and  eflfectual,  but  clearly  a  political,  establishment;  smce  the  perma- 


REPOBT  OF  BOABD  OF  TAX  COIOflSSIONEBS 


7 


nent  right  of  property,  vested  in  the  ancestor  himself,  was  no  natural, 
but  merely  a  civil,  right."    (Vol.  2,  Blackstone's  Commentaries,  10). 

Probably  the  decision  most  often  quoted  sustaining  this  contention 
is  from  Eyre  vs.  Jacob,  14  Gratt.  (Va.)  422,  430,  in  which  Judge  Lee 
says: 

"The  right  to  take  property  by  devise  or  descent  is  the  creature  of 
the  law  and  secured  and  protected  by  its  authority.  The  legislature 
might,  if  it  saw  proper,  restrict  the  succession  to  a  decedent's  estate, 
either  by  devise  or  descent  to  a  particular  class  of  his  kindred,  say 
to  his  lineal  descendants  and  ascendants;  it  might  impose  terms  and 
conditions  upon  which  collateral  relations  may  be  permitted  to  take 
it;  or  it  may  to-morrow,  if  it  pleases,  absolutely  repeal  the  statute 
of  wills  and  that  of  descents  and  distributions  and  declare  that, 
upon  the  death  of  a  party,  his  property  shall  be  applied  to  the  payment 
of  his  debts,  and  the  residue  appropriated  to  public  uses.  Possessing 
this  sweeping  power  over  the  whole  subject,  it  is  difficult  to  see  upon 
what  ground  its  right  to  appropriate  a  modicum  of  the  estate,  call 
it  a  tax  or  what  you  will,  as  the  condition  upon  which  those  who  take 
the  estate  shall  be  permitted  to  enjoy  it,  can  be  successfully 
questioned.  "* 

History. 

The  general  application  of  this  system  of  taxation  is  evidenced  by 
the  fact  that  it  is  in  use  in  all  the  principal  countries  of  Europe,  in 
Australia  and  in  Canada,  and  in  all  but  six  of  the  United  States,  in 
Porto  Bico  and  in  Hawaii. 

"  The  origin  of  the  inheritance  tax  has  usually  been  attributed  to 
the  Emperor  Augustus,  who  is  known  to  have  estaUished  such  a  tax  . 
at  Rome  in  the  year  6  A.  D."t   The  Romans  appear  to  have  bor- 
rowed the  idea  from  the  Egyptians  who  had  such  a  tax  in  117  B.  C. 

The  tax  imposed  by  Augustus  was  a  5  per  c^t.  tax  on  inheritances 
and  bequests,  limited  in  its  application  to  Roman  citizens,  with 
small  exemptions  and  allowances  for  funeral  expenses  and,  under 
certain  conditions,  the  exemption  of  the  nearest  relatives. 

■"For  a  list  of  decisions  see  "The  Inheritance  Tax  Law,"  (Blakemore  and  Bancroft)  Chapter  7; 
•bo  "The  InhniteiiM  Tax"  (Max  West). 
fllM  laheritanoe  Tax.  Max  West. 


8 


KEPORT  OF  BOABD  OF  TAX  COM¥ISSION£BS. 


Under  different  titles  and  in  various  forms^  taxation  of  inheritances 
has  come  down  to  the  present.  During  the  Middle  Ages  certain 
feudal  dues  were  exacted,  the  relief  and  heriot,  by  the  overlord. 

"But  the  direct  connection  between  these  feudal  dues  and  the 
modern  inheritance  taxes  is  hard  to  trace.  It  is  probable  that  the 
older  dues  suggested  the  feasibility  of  the  modem  mheritance  tax. 
But  no  closer  connection  than  that  has  been  established.  "* 

Germany,  Denmark,  France,  The  Netheriands,  some  ot  the 
Italian  cities  and  the  Duchy  of  Mantau  imposed  various  forms  of 
taxes  on  inheritances  from  the  Fourteenth  to  the  Seventeenth 
Centuries. 

"But  while  the  influence  of  the  medieval  idea  is  stiU  to  beseen  in  a 
few  of  the  continental  countries  where  the  payment  is  regarded  as 
made  for  the  privilege  of  succession,  the  tax  is  ahnost  everywhere  of 
mdependent  and  comparatively  recent  origin.  The  inheritance  tax 
as  now  understood  in  most  countries  is  essentially  the  product  of 
modem  democracy.  The  inheritance  tax  is  to-day  found  primarily 
m  democracies  like  those  of  England,  Switzeriand,  AustraUa  and 
Amenca."t 

Federal  Inheritance  Taxation  in  the  United  States. 

The  Federal  government  imposed  an  inheritance  tax  at  an  early 
period.  The  first  act  imposing  a  tax  of  this  character  provided  for 
a  light  graduated  tax  on  mheritances  other  than  those  received  by 
wives,  children  and  grandchildren.  The  act  took  effect  in  July,  1798, 
and  remained  in  force  four  years.  A  system  of  mheritance'  taxes 
was  recommended  to  Congress  in  1815,  but  the  recommendations 
were  not  adopted.  In  1862  an  inheritance  tax  was  imposed  as  a  war 
revenue  measure.  This  law  was  amended  several  times,  and  the 
rates  were  raised  in  1864.  The  law  was  repealed  by  act  of  July  14, 
1870,  the  repeal  takmg  effect  October  1st. 

The  income  tax  provision  of  the  National  Revenue  Act  of  1894 
contained  a  provision  for  taxmg  as  mcome  aU  money  and  the  value  of 

*Iiitrodiaetiaa  to  Public  Finance,  p.  303,  Carl  C  Ptehu 
fSamim  oo  Tuatioii.  |>p.  m.  122.  SdigBMi. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 


9 


all  personal  property  acquired  by  gift  or  inheritance.  This  law 
was  annulled  by  the  Supreme  Court.  The  war  revenue  bill  of  1898 
contained  a  provision  for  taxing  legacies  and  distributive  shares; 
it  was  amended  in  1901  to  ei^mpt  certain  bequests,  and  the  act 
as  a  whole  was  repealed  in  1902. 

Eariy  State  Inheritance  Taxation. 

P^insylvania  was  the  first  state  to  impose  an  inheritance  tax; 

the  law  which  was  passed  in  1826,  although  amended  several  times, 
remains  practically  as  it  was  enacted.  This  law  provided  for  a 
uniform  rate  of  5  per  cent,  and  an  ex^ption  of  $250,  and  it  did  not 
apply  to  the  inheritances  of  a  father,  mother,  husband,  wife,  child, 
step-child,  lineal  decendant  and  daughter-in-law.  The  law  recognized 
the  situs  of  personal  inroperty  as  the  domicile  of  the  owner,  and  did 
not  impose  a  tax  on  the  stock  of  domestic  corporations  owned  by  a 
non-resident  decedent,  and  did  not  tax  the  securities  of  a  foreign  cor- 
poration owned  by  a  non-resident  decedent,  even  when  such  securities 
were  kept  withiiu  the  state. 

Louisiana  was  the  second  state  to  impose  an  inheritance  tax. 
The  law  was  enacted  in  1828,  was  repealed  in  1830,  revived  in  1842, 
and  remained  in  force  until  1877.  The  tax  was  imposed  at  the  rate  of 
10  per  cent,  on  property  passing  to  non-resident  aliens.  An  attempt 
was  made  later,  in  1894,  to  revive  the  statute  of  1828,  but  the  law  was 
declared  unconstitutional.  The  constitution  was  amended  in  1898, 
limiting  the  power  of  the  legislature  in  respect  to  inheritance  taxation, 
fixing  the  maximum  rate  at  3  per  cent,  for  direct  and  10  per  cent,  for 
collateral  heirs.  Louisiana  now  has  an  inheritance  tax  law  which 
provides  for  a  tax  of  2  per  cent,  on  direct  heirs,  with  an  exemption  of 
$10,000,  and  a  5  per  cent,  tax  on  collateral  inhmtances  with  no  exemp- 
tion; the  tax  not  to  be  operative,  however,  if  it  can  be  shown  that  the 
property  has  borne  its  just  share  of  taxes  prior  to  donation  or 
inheritance. 

Virginia  in  1844  imposed  a  collateral  inheritance  tax  on  estates  of 
$250  or  more  passing  to  persons  other  than  the  decedent's  father, 


10 


WBPOiW  OF  BOABD  OF  TAX  COM1CI88IONEBS. 


mother,  husband,  wife,  brothers,  sisters,  or  lineal  descendants.  The 
law  required  the  rates  to  be  fixed  by  the  legislature  at  each  session, 
and  the  law  was  held  to  have  been  r^ed  because  the  legislature 
omitted  to  fix  the  rate  in  1856.  A  collateral  inheritance  tax  was 
again  imposed  in  1860,  and  with  vaiying  rates  and  periodic  susp^. 
sions  it  continued  in  force  until  1884,  when  it  was  repealed.  A 
collateral  mheritance  tax  was  reimposed  in  1896.  Parents,  grand- 
parents, husband,  wife,  brothers,  sisters  and  lineal  descendants  were 
exempt  and  also  certain  bequests  for  pubHc,  educational,  benevolent 
and  religious  purposes. 

Taxation  of  Direct  and  Collateral  Heirs. 

The  following  states  adopted  collateral  mheritance  tax  laws  which 
did  not  provide  for  the  taxation  of  direct  heurs,  m  the  order  named : 

Pennsylvania,  1826;  Vhrginia,  1844;  Maryland,  1845;  North 
Carolma,  1847;  Alabama,  1848;  Delaware,  1869;  New  York,  1885; 
West  Virginia,  1887;  Connecticut,  1889;  Massachusetts,'  1891  j 
Tennessee,  1891;  New  Jersey,  1892;  Ohio,*  1893;  CaUfomia,  1893; 
Make,  1893;  Vermont,  1896;  Iowa,  1896;  Missouri,  1899;  Arkansas,' 
1901;  North  Dakota,  1903;  New  Hampshire,  1905;  Kentucky,  1906; 
Texas,  1907;  Kansas,*  1915. 

Eleven  of  the  twenty-two  states  which  originally  unposed  collateral 
inheritance  taxes  have  not  extended  the  tax  to  direct  heirs: 
Alabama,t  Delaware,  Iowa,  Kentucky,  Maryland,  Missouri,  New 
Hampshire,  Pennsylvania,  Texas,  Vermont  and  Virgmia. 

Eleven  states  which  originally  had  collateral  inheritance  taxes 
only  have  extended  them  to  mclude  direct  heirs:  Arkansas,  Cali- 
fornia, Connecticut,  Massachusetts,  Maine,  New  Jersey,  New  York, 
N orth  Carolina,  North  Dakota,  Tennessee  and  West  Virginia. 

Two  states,  Kansas  and  Ohio,  taxed  direct  inheritances  originally, 
but  now  restrict  the  tax  to  collaterals  and  strangers. 


*Had  law  providing  for  a  tax  on  direct  inhexituiOM  prior  to  date  heie  tiven. 
tRepealed  in  1868. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS 


11 


There  are  twelve  states  which  at  present  tax  only  collaterals: 
Delaware,*  Iowa,  Kansas,*  Kentucky,  Maryland,  Missouri,  New  • 
Hampshire,  Ohio,  Pennsylvania,  Texas,  Vermont  and  Virginia. 

Nineteen  states  have  enacted  laws  imposing  both  direct  and 
collateral  inheritance  taxes  at  the  same  time:  Colorado,  Greorgia, 
Idaho,  Illinois,  Indiana,  Kansas,  Michigan,  Minnesota,  Montana, 
Nebraska,  Nevada,  Ohio,  Oklahoma,  Oregon,  South  Dakota,  Utah, 
Washington,  Wisconsin  and  Wyoming. 

Ohiot  was  the  first  state  to  tax  all  classes  of  property  passing  to 
direct  heurs  and  also  the  first  to  apply  progressive  rates.  The  law 
which  was  passed  in  1894  was  held  unconstitutional  the  year  after 
its  passage  because  of  the  progressive  feature  and  certain  provis- 
ions regarding  the  exemption  of  $20,000.  In  1904  a  direct  inherit* 
ance  tax  was  imposed  at  the  rate  of  2  per  cent,  with  a  $300  exemption. 
This  act  was  repealed  in  1906.  At  present  collateral  inheritances 
only  are  taxed  at  5  per  cent,  with  an  exemption  of  $200. 

A  tax  on  direct  inheritances  has  been  applied  in  t^e  following 
states  in  the  order  named: 

New  York,  1^91 — direct  tax  applied  to  personal  property  only, 
extended  to  realty  in 1903 ;  Illinois,  1895 ;  Connecticut,  1897 ;  Montana,| 
1897;  North  Carolina,  1897;  Louisiana,  1898;  Michigan,  1899— direct 
tax  applies  to  personal  property  only;  Colorado,  1901;  Nebraska, 
1901;  Utah,  1901 ;  Washmgton,  1901;  Or^n,  1903;  Wiscomdn,  1903; 
Wyoming,  1903;  Ohio,  1904 — repealed  1906,  collaterals  only  taxed 
since  1906;  California,  1905;  Minnesota,  1905;  South  Dakota,  1905; 
Arkansas,  1907;  Idaho,  1907;  Massachusetts,  1907;  Oklahoma, 
1907— invalid,  new  law  1915;  West  Virginia,  1907;  Kansas,  1909— 
repealed  1913,  collaterals  only  taxed  since  1915;  Maine,  1909; 
Tennessee,  1909;  Arizona,  1912;  Georgia,  1913;  Indiana,  1913; 
Nevada,  1913;  North  Dakota,  1913;  New  Jersey,  1914. 

^Delaware  tuod  <m]y  •tnacen  in  blood,  1883-1800.   EaooM  tawd  both  direct  and  ooUatem 

1909-1913. 

fThe  Louisiana  law  of  1828  provided  for  a  tax  on  property  passing  to  non-resident  aliens 
regardlesB  of  vriatimiBhip.   The  New  York  law  of  1891-1008  taxed  pereomalty  paaeing  to  direct  hein 
tLaw  appanntly  intended  to  exempt  real  estate  paanns  to  direct  heirs,  but  the  wording  o  ithe 

statute  is  obscure,  and  by  strict  interpretation  said  real  estate  so  passing  is  exempt  to  all  ditec 
heirs  except  fatlier.  mother,  husband  and  wife;  these  are  taxed  at  the  collateral  rate  of  5  per  cent. 


12 


BWOBT  OF  BOABD  OF  TAX  C0MMI88I0NEBS. 


The  thirty  states  which  at  present  tax  both  direct  and  collateral 
mhentauc^  are  Ari«m,  Arkanaas,  Califonria,  Colonido,  Connecticut, 
Gec^gm,  Idaho,  Illinois,  Indiana.  Louisiana,  Maine,  Massachusetts. 
Michigan,  Minnesota,  Montana,  Nebraska,  Nevada,  New  Jersey 
New  York  North  Carolina,  North  Dakota.  Oklahoma,  Oregon,  South 
D«J^ota.  Tennessee,  Utah,  Washington,  West  Virginia,  Wisconsin 
and  Wyoming. 

Kansas  and  Ohio  each  luive  had  taxes  on  direct  inheritances 
Which  have  been  repealed  and  never  reenacted.  Alabama  had  a 
collateral  inheritance  tax,  1848-1868.  The  constitution  of  Alabama 
adopted  m  1901,  imposes  restrictions  upon  the  legislature  prohibiting 
thetaxataonof  inheritances  of  father,  mother,  husband,  wife,  brothers, 
asters,  children  and  lineal  descendants,  and  limits  the  rate  on  t«able 
mhentances  to      p^  cent. 

The  inheritance  tax  law  of  Kansas,  adopted  in  1909,  was  repealed 
in  1913  apparently  for  purely  poUtical  reasons.   In  1915  a  law 
mipofflng  a  tax  on  collateral  inheritances  was  adopted.   This  law 
provides  for  three  classes;  the  first  class,  consisting  of  husband,  wife 
Imeal  ancestor,  lineal  descendant,  adopted  child,  lineal  descendant  of 
same,  son^-law  or  daughter-in-law,  is  not  taxed;  the  second  class, 
brothers  and  sisters,  is  allowed  an  unconditional  exemption  of  «  000 
with  rates  from  3  to  12^  per  cent.;  third  class.  aU  others,  no  exempt 
tion  and  the  rat«  are  from  6  to  16  per  cent.   It  is  further  provided 
that  shares  which  net  less  than  «200,  after  all  deductions  aUowed 
are  made,  are  not  taxed. 

^«         -  ^eced  by  , 

Inheritance  tax  laws  have  been  declared  unconstitutional  in 
m^te^  because  of  their  failure  to  conform  to  the  restrictions 
«ri  hmitations  miposed  by  the  rule  laid  down  in  their  constitutions 
that  taxes  shall  be  unifonn  and  equal  according  to  value. 

The  difficulty  under  such  constitutional  restrictions,  of  formulating 
an  equitable  mheritance  tax,  which  according  to  modem  ideas  J 


BBFOBT  OF  BOABD  OF  1?AX  COIOOSSIONEBS.  13 

practice  should  provide  for  classified  rates  and  exemptions  as  well 
as  reoogoUe  degrees  of  relationship,  is  appar^t.  The  necesraty  of 
exempting  small  estates  passing  to  direct  heirs,  and  the  desirabiUty 
of  progressive  rates,  and  exemptions  and  classification  in  accord- 
ance with  degrees  of  relationi^p,  impelled  legislators  to  incorpo- 
rate these  features  in  their  laws,  and  the  courts  when  appealed 
to  on  the  grounds  of  constitutionality,  while  recognizing  the  right 
of  the  law-making  body  to  unpoee  inheritance  taxes,  in  numerous 
cases  declared  the  laws  unconstitutional.  The  constitutional  limita- 
tions on  the  law-making  bodies  applied  to  collateral  as  well  as  durect 
inhmianoes. 

In  New  Hampshire,  after  operating  under  a  collateral  inheritance 
tax  law  for  four  years,  1878-1882,  the  law  was  declared  unconstitu- 
tional; later,  in  1903,  the  constitution  was  amended,  and  the  present 
law  taxing  collateral  inheritances  was  passed  in  1905. 

Minnesota  seems  to  have  had  the  greatest  amount  of  difficulty 
in  complying  with  its  constitutional  provisions;  the  inheritance  tax 
laws  of  1897,  1901  and  1902  were  in  turn  declared  unconstitutional, 
and  the  law  of  1905  survived  aft^  considerable  litigation.  The 
question  seems  to  have  been  settled  by  an  amendment  to  the  con- 
stitution in  1906  which  extended  the  powers  of  the  legislature  in  the 
taxation  of  inheritances. 

The  Oklahoma  law  of  1907  was  practically  declared  invalid,  and 
a  new  law  was  passed  in  1915.  Missouri  attempted  to  tax  collateral 
inheritances  in  1895,  but  the  law  was  declared  unconstitutional; 
later,  in  1899,  a  law  taxing  collaterals  was  passed  and  is  still  in  force. 
In  South  Dakota  the  law  was  declared  unconstitutional,  but  upon 
rehearing  was  sustained. 

The  direct  inheritance  tax  law  of  Ohio  was  declared  unconstitu- 
tional because  of  progressive  rates  and  the  exemption  of  estates 
of  $20,000  or  less,  but  the  court  ventured  the  statement  that  if  that 
exemption  or  any  othar  exemption  had  applied  to  every  estate  it 
would  have  been  valid;  it  was  the  inequality  of  the  exemption, 
not  the  fact  of  an  exemption  alone,  which  was  the  determining  factor. 


14 


BBPOBT  OF  BOABD  OF  TAX  C01IHIS8I0MBBS. 


Pennsylvania's  direct  inheritance  tax  law  was  declared  uncon- 
stitutional because  of  the  exemption  of  $5,000.  In  Tomeasee  a 
similar  objection  was  not  sustained. 

Tlie  Wisconsin  law  of  1899  was  declared  unconstitutional  because 
the  exemption  depended  upon  the  size  of  the  entire  estate  and  not 
upon  the  separate  shares.  The  Massachusetto  Supr«ne  Court  on 
the  same  point  under  a  similar  exemption  said: 

"The  exemption  in  the  statute  under  con«d«ation  is  certainly 
large  as  an  exemption  of  estates,  but  it  is  pecuHarly  withm  the  discre- 
tion  of  the  legislature  to  determine  what  exemptions  should  be  made 
m  apportwrnng  the  burdens  of  taxation  among  those  who  can  best 
bear  theih,  and  we  are  not  satisfied  that  this  exemption  is  so  clearly 
unreasonable  as  to  require  us  to  declare  the  statute  void."*  " 

In  the  same  case  the  court  sustained  the  ri^t  to  distinguish 
between  direct  and  collateral  heirs  and  strangers  in  blood,  both  as 
to  rates  and  exemptions,  saying  that  the  principle  had  the  sanction 
of  practice  and  rcsason. 

Constitutional  Difficulties  at  a  Mfaiininni  in  Rhode  Island. 

The  constitution  of  Rhode  Island  in  relation  to  taxation  says: 
"  and  the  burdens  of  the  state  ought  to  be  fairly  distributed  among  its 
citisen8."t    and  "tiie  general  assembly  shall,  from  time  to  time 
I«mde  for  making  new  valuations  of  property,  for  the  assessment 
of  taxes,  m  such  maimer  as  they  may  deem  best,  "t 

It  is  apparent  that  our  legislature  is  free  from  most  of  the  restric- 
tions and  limitations  imposed  by  the  constitutions  in  a  number  of 
states,  and  that  many  of  ti»e  perplexing  questions  in  regard  to  con- 
stitiitionaUty  which  have  arisen  elsewhere  are  not  lilndy  to  occur 
in  Rhode  Island. 

Cmwtb  of  Taxatkn  of  Inheritances  in  Recent  Years. 

After  the  passage  of  the  collatwal  inhrajtance  tin  law  of  Pennsyl- 
vania  in  1826  and  the  law  taging  the  inheritances  of  non-resident 

•Minot  vs.  Winthrop,  102  Man.  ~~  ~  ~ 

tArt.  1,  Sec.  2. 
tArt.  rV.  Seo.  16. 


BXFOBT  OF  BOABD  OF  TAX  OOMMISSIONEBS.  15 

aliens  by  Louisiana  in  1828,  no  further  legislation  on  the  taxation 
of  inheritances  was  adopted  for  sixteen  years.  In  the  next  four 
years  Alabama,  Maryland,  North  Carolina  and  Virginia  imposed 
collateral  inheritance  taxes.  From  1848  to  1885  Delaware  was  the 
<mly  state  to  adopt  legislation  of  this  character. 

The  year  1885  may  properly  be  considered  as  the  date  from 
which  the  real  development  of  inheritance  taxation  began  in  the 
United  States.  Three  states— Connecticut,  New  York  and  West 
Virginia — adopted  inheritance  tax  laws  from  1885  to  1890.  During 
the  period  1890-1900  inheritance  taxation  assumed  a  prominent 
place  in  legislation,  and  sixteen  states  either  adopted  inh^tance 
taxation  for  the  first  time  or  expanded  their  old  laws.  The  next 
ten  years  showed  even  a  more  rapid  extension  of  this  principle  of 
taxation,  twenty-three  states  passed  laws  on  the  subject,  and  from 
1910  to  1915  six  more  applied  the  system. 

Twelve  states  have  either  incorporated  inheritance  taxes  into  thdr 
fiscal  systems  or  enacted  new  laws  within  the  last  three  years,  and 

many  states  h^ve  made  important  additions  and  amendments  to 
thek  laws  during  the  same  period. 

There  are  now  but  six  states  which  do  not  tax  inheritances  in  some 
form:  Alabama,  Florida,  Mississippi,  New  Mexico,  Rhode  Island 
and  South  Carolina. 

A  Tax  Upon  the  Tlraiisler  of  Property. 

There  has  been  much  discussion  as  to  whether  the  tax  was  upon  the 
property  itself  or  upon  the  transfer  of  the  property.   The  decided 

weight  of  opinion,  both  legal  and  economic,  is  to  the  effect  that  it 
is  a  tax  upon  the  transfer. 

Differences  between  the  States  in  Qassificatkm  of  Heirs,  Exemptions 
and  Rates. 

There  are  wide  differences  betweoi  the  twelve  states  which  do  not 

tax  the  inheritances  of  direct  heirs,  as  to  what  transfers  are  taxed, 
and  as  to  the  rates  imposed  and  exemptions  allowed.   In  some  states 


16 


BBPOBT  OP  BOABD  OF  TAX  C01IMIB8I0NBB8. 


graadparente,  brothers  and  sisters,  and  lufcles  and  aunts  are  included 
in  the  exempt  class;  in  others  the  exemption  is  confined  to  father, 
mother,  husband,  wife,  adopted  chUd  and  direct  lineal  descendants 
of  the  testator. 

Four  states  aUow  no  exemptions  and  have  a  flat  rate  of  5  per  cent., 
and  their  classifications  of  exempt  heirs  are  not  very  dissimilar! 
Delaware  has  four  classes,  four  rates  and  a  flat  exemption  of  $500. 
Texas  has  three  classes,  three  progressive  rates  and  exemptions  of 
12,000,  $1,000  and  $500  according  to  class. 

In  the  states  imposing  a  tax  on  direct  inheritances  the  practices 
are  r&y  dissimilar,  classes,  rates  and  exemptions  varying  between 
wide  limits. 

California  and  Minnesota  afford  perhaps  the  best  examples  of 
liighly  differentiated  classifications  as  to  relationship,  exemptions, 
rates  and  the  points  at  which  the  highest  rates  apply. 

In  Califomia  in  the  dass  of  direct  heirs  are  included  lineal  ancestors 
of  decedent,  husband  or  wife,  Imeal  issue,  adopted  or  acknowledged 
chUd,  lineal  issue  of  either.   In  this  class  the  exemption  of  widow  or 
minor  child  is  $24,000  and  $10,000  to  others.   The  rate  on  $25,000 
or  less  IS  1  per  cent. ;  $25,000  to  $50,000,  2  per  cent.    The  maximum 
rate  of  15  per  cent,  is  reached  at  $1,000,000,  and  aU  sums  in  excess 
of  this  amount  are  taxed  at  this  rate.   CoUateral  heirs  are  divided 
into  two  classes,  with  exemptions  of  $2,000  and  $1,000  according  to 
nearness  of  relationship.   Strangera  in  blood  are  aOowed  an  exemption 
of  $500.   The  initial  rates  for  these  three  classes  are  3,  4  and  5  per 
cent.,  respectively.    The  maximum  rate  in  the  case  of  collateral 
heirs  appHes  to  amounts  over  $1,000,000,  and  these  rates  are  26  and 
30  per  cent.,  respectively.   The  maximum  rate  applying  to  strangers 
m  blood  is  30  per  cent.,  but  it  appUes  to  amounts  over  $500,000. 

In  Minnesota  the  highest  rate  applies  to  inheritance!  of  over 
$100,000  and  m  the  case  of  a  wife  or  lineal  issue  it  is  3  percent.; 
husband,  adopted  or  acMowledged  child  or  the  issue  of  the  same 
per  cent.   The  same  rate  applies  to  lineal  ancestors,  but  the 
exemption  in  that  ease  is  but  $3,000  instead  of  $10,000  as  in  the 


BEPOBT  OF  BOABD  OF  TAX  COMMISSIONEBS 


17 


first  two  classes.  In  the  case  of  brother,  sister,  nephew,  niece,  son-in- 
law  or  daughter-in-law  the  exemption  is  reduced  to  $1,000  and  the 
maximum  rate  is  9  per  cent.  In  the  next  class,  which  ocnnprises 
uncles,  aunts  or  descendants  of  same,  the  exmnption  is  reduced 
to  $250  and  the  maximum  rate  is  12  per  cent.;  for  strangers  in  blood 
the  maximum  rate  is  15  per  cent. 

Tennessee  affords  an  example  of  the  simpler  classification.  There 
are  but  two  classes;  father,  mother,  husband,  wife,  child  and 
lineal  descendants  of  decedent  comprise  the  first  dass.  Estates 
of  decedents  less  than  $10,000  are  not  taxed;  estates  of  $20,000  or 
less  are  taxed  at  1  per  cent.,  and  estates  of  over  $20,000  at  1}^  per 
cent.  The  second  class  comprises  all  not  named  above;  tiiere  is 
no  tax  on  estates  of  less  than  $250,  and  for  estates  greater  in  value 
the  tax  is  5  per  cent. 

The  lowest  initial  rate  applied  in  any  state  to  direct  heirs  is  1  p^ 
cent,  and  the  highest  2  per  cent.  The  lowest  ultimate  rate  is  1  per 
cent,  and  the  highest  15  per  cent,  for  the  first  class.  As  these  classes 
vary  to  a  great  extait,  and  as  there  is  a  great  difference  in  the  amount 
of  exemption  allowed,  the  rates  alone  do  not  offer  a  very  satisfactory 
basis  for  comparison.  ^ 

Methods  of  Classifying  Hdrs. 

There  are  very  wide  differences  between  the  several  states  in 
methods  of  classification.  In  those  states  which  are  said  to  tax 
collaterals  only,  we  find  considerable  differences  as  to  what  constitutes 
direct  heirship.  Some  states  include  lineal  ancestors,  sons-in-law 
and  daughters-in-law  in  the  ex^pt  class,  while  others  do  not.  In 
the  Kentucky  law  father,  mother,  husband,  wife,  lawful  issue, 
son-in-law,  daughter-in-law,  adopted  child  and  lineal  descendant  of 
decedent  are  exempt,  and  all  others  are  taxed  at  the  same  rate  and 
the  same  exemption  is  allowed. 

In  Delaware  the  exempt  class  includes  father,  mother,  grandfather, 
grandmother,  wife,  husband,  child,  adopted  child  and  lineal  descend- 
ants, but  collaterals  are  divided  into  three  classes  and  different 


18 


BBPOBT  OF  BOABD  OF  TAX  COIIMIBSIONEBS. 


rates  appHed,  and  "aU  others"  are  taxed  at  still  a  different  rate  and 
allowed  less  exemption  than  the  other  classes. 

States  taxing  direct  inheritances  show  a  similar  difference  m  classi- 
fication. Arkansas  taxes  the  mheritance  of  father,  mother,  husband, 
wife,  child,  brother,  sister,  son-in-law,  daughter-in-law,  adopted  or 
acknowledged  child  at  the  lowest  rates,  distinguishmg  between 
manbers  of  this  class  as  to  exemptions,  and  places  all  others  in  the 
second  class.  Tennessee  limits  the  first  class  to  father,  mother, 
husband,  wife,  child  and  lineal  descendants,  placing  aU  others  in  the 
4Koond  class. 

Massachusetts  affords  an  example  of  a  wide  extension  of  the 
membership  m  the  first  class:  husband,  wife,  lineal  ancestor,  Imeal 
descendant,  adopted  child,  lineal  descendant  of  same,  adoptive 
parent,  Hneal  ancestor  of  same,  son-in-law  or  daughter-in-law.  The 
second  class  is  composed  of  brothers,  sistei»,  of  fuU  or  half  blood, 
nephews  and  nieces,  all  others  being  in  the  third  class.    In  some 
states  uncles  and  aunts  are  in  one  class  and  great  uncles  and  great 
aunts  in  another.   No  general  rule  as  to  classification  is  found  and 
no  two  states  seem  to  be  exactly  alike  in  methods  of  classification. 
Some  form  of  classification  is  found  in  all  states  imposing  inheritance 
taxes  but  one,  and  the  principle  is  amply  sustained  both  from  the 
legal  said  eeommdc  standpoint. 

Progressive  Rates. 

The  question  of  the  constitutionaKtyof  the  progressive  inheritance 
tax  was  settled  definitely  in  cases  brought  under  the  Illinois  statute 
of  1895.  This  law  providing  for  progressive  rates  to  distant  rela- 
tions and  strangers  was  upheld  both  by  the  state  courts  and  the 
Supreme  Court  of  the  United  States.*  The  positive  determination 
of  this  question  was  followed  by  a  rapid  appUcation  of  the  pro- 
gresfflve  principle  in  a  number  of  states,  and  progressive  rates  are 
now  appHed  to  one  or  more  classes  in  the  following  states :  Arizona 
Arkansas,  Cahfomia,  Colorado,  Connecticut,  Idaho,  Illinois,  Indiana 


•KlHAMPMitt  m  Drake.  167  lU..  122;  Magoon  va.  Truat  4b  Saviaci Bank,  170  U.  S..  288. 


BBPOBT  OF  BOABD  OF  TAX  COMMXSSIONEBS 


19 


Kansas,  Maine,  Massachusetts,  Minnesota,  Nebraska,  Nevada, 

New  Jersey,  New  York,  North  Carolina,  North  Dakota,  Oklahoma, 
Oregon,  South  Dakota,  Tennessee,  Texas,  Utah,  Washington,  West 
Vurginia  and  Wisconsin. 

The  states  imposing  inheritance  taxes  which  do  not  employ 
progressive  rates  are:  Delaware,  Georgia,  Iowa,  Kentucky,  Louis- 
iana, Maryland,  Michigan,  Missouri,  Montana,  Ncfw  Hampshire, 
Ohio,  Pennsylvania,  Vermont,  Virginia  and  Wyoming. 

The  imnciples  of  progressive  rates,  the  classification  of  relationship 
and  the  gradua^on  of  ^cemptions  according  to  rdationship  have 
found  such  general  application  in  the  practices  of  the  several  states 
that  they  do  not  seem  to  require  further  justification. 

"To  make  a  distinction  between  collateral  kindred  or  strangers 

in  blood  and  kindred  in  the  direct  line  in  reference  to  the  assessment 
of  such  a  tax,  either  by  exempting  the  kindred  in  the  direct  line  or  by 
imposing  on  collaterals  and  strangers  a  higher  rate  of  taxation,  has 
the  sanction  of  nearly  all  states  which  have  levied  taxes  of  this  kind."* 

The  General  Tendency. 

Notwithstanding  this  great  variation  in  details  above  referred  to 
a  decided  general  trend  is  apparent.  All  states  taxing  direct  in- 
heritances allow  some  exemptions.  These  exemp^ons  vary  in 
amounts  for  members  of  the  first  class  from  $3,000  to  $24,000,  and 
there  are  but  four  states — ^Missouri,  New  Hampshire,  Vermont  and 
Virginia — which  do  not  allow  some  exemption,  and  these  states  do 
not  tax  direct  inheritances.  There  seems  to  be  a  considerable 
agreement,  so  far  as  can  be  determined  by  the  different  practices, 
that  direct  and  collateral  heirs  and  strangers  in  blood  should  have 
different  amounts  of  exemption  allowed,  dimishing  as  the  degree  of 
relationship  becomes  more  remote,  and  thirty  of  the  forty-two  states 
taxing  inheritances  apply  to  a  greater  or  less  degree  this  principle. 

Classification  according  to  relationship  is  found  in  every  state 
taxing  inheritances,  except  Utah,  which  has  one  class,  an  exemption 
of  $10,000  applying  to  the  whole  estate,  and  progressive  rates. 


*Miuot  VB.  Winthrop,  162  Mass. 
8 


20 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 


The  great  majority  of  states  employ  progressive  rates  varying  both 
in  accordance  with  the  amount  of  the  inheritance  and  the  remote- 
ness of  relationship.   There  is  no  uniformity  of  practice  either  as 
regards  the  rate  of  progresaon  or  as  to  the  point  at  which  the  maxi- 
mum rate  is  applied,  or  as  to  what  pomt  in  relationship  the  rate,  or 
exemption,  or  both,  is  changed.   The  general  acceptance,  however, 
of  the  pnnciples  that  smaU  inheritances  to  direct  heirs  should  be 
exempt,  that  the  rates  should  be  progressive  both  as  regards  the 
amount  of  the  inheritance  and  according  to  the  degree  of  rektion- 
fihip^  that  exemptions  should  be  graduated  accordmg  to  relationship, 
and^that  the  maxunum  rate  should  apply  to  the  excess  over  a  certaiii 
feed  amount,  is  worthy  of  attention. 

The  Qii^fiofi  of  Situs  for  purposes  ofl  taxation  and  the  Danger  of 
Double  Taxation.  ^ 

Th&e  is  Kttle  interstate  comity  m  the  taxation  of  inheritances, 
and  a  resultant  double  taxation  in  many  cases.   The  proper  situs 
of  taxation  for  real  estate  is  recognized  as  the  location  of  the  property. 
The  real  difficulty  appears  in  the  taxation  of  transfers  of  intangible 
property.    Serious  efforts  have  been  made  by  some  states  to  avoid 
double  taxation  by  the  introduction  into  thdr  laws  of  so-caUed 
"reciprocal  clauses, "  which  provide  for  a  relief  from  taxation  of 
property  taxed  in  another  state  in  a  similar  manner;  but  if  the  rates 
are  dissimilar  and  the  foreign  rate  is  less  they  impose  a  tax  at  a  rate 
which  represents  the  difference  between  the  two  rates.   Some  states 
unpose  the  tax  upon  corporate  securities  owned  by  a  non-resident 
decedent  kept  within  the  state,  whether  the  corporation  is  chartered 
withm  the  state  or  not.    In  some  mstances  transfers  of  the  securi- 
ties of  domestic  corporations  are  taxed  regardless  of  the  physical 
location  of  the  securities  or  the  domicile  ot  the  decadent.  These 
states  are  actuated  by  a  desire  for  revenue  rather  than  by  any  con- 
sideration of  sound  economic  theory.    Under  existing  conditions 
double  or  even  multiple  taxation  may  readily  occur. 

In  the  formulation  of  an  inheritance  tax  law  certainly  one  of  the 
most  difficult  questions  involved  is  the  determination  of  the  situs 


REPOBT  OV  BOARD  OF  TAX  COMMISSIOlpSBS. 


21 


at  which  the  various  classes  of  property  should  be  taxed.  In  the 
case  of  real  estate  the  question  is  definitely  settled;  it  is  taxed 
imiversally  in  the  jurisdiction  where  it  is  located;  but  beyond  this 
nothing  is  positively  determined. 

The  practice  ui  regard  to  real  estate,  so  to  as  it  applies  to  inherit- 
ance taxation,  seems  to  meet  the  requirements  of  justice  and  sound 
economic  principle,  and  there  is  no  reason  and  apparently  no  desire 
to  change  or  modify  it.  But  even  here  when  ihexe  is  conversion  of 
the  real  estate  in  one  state  for  the  purpose  of  paying  a  legacy  or 
legacies,  it  has  been  held  that  the  proceeds  of  the  conversion  were 
intangible  and  liable  to  taxation  at  the  domicile  of  the  testator  in 
another  state. 

The  real  difficulty  arises  in  the  transfer  of  personal  property, 
and  in  this  regard  there  is  a  bewildering  diversity  of  practice 
and  opinion  which  results  in  double  or  multiple  taxation  in  an 
unjustifiable  form,  and  annoyance  and  unnecessary  expense  in 
administration. 

In  any  conmderation  of  double  or  multiple  taxation  it  is  necessary 
to  determine  the  different  kinds,  and  to  separate  those  which  are 
bad  and  avoidable  from  others  which  are  justifiable  or  unavoidable. 

In  its  ordinary  use  the  term  ''double  taxation''  is  applied  in  such 
a  manner  as  to  convey  the  idea  of  injustice  and  oppression,  and  so 
well  founded  in  the  popular  mind  has  this  meaning  become  that  any 
system  of  taxation  to  which  it  may  be  applied  is  at  once  condemned 
without  considering  the  nature  or  effect  of  the  double  taxation. 

An  illustration  of  douUe  taxation  which  is  poriEectly  just  and  proper 
from  both  the  economic  and  moral  standpoint  is  afforded  by  the 
usual  local  tax  assessed  in  this  state.  The  local  tax  and  the  state 
tax  are  separate  and  distinct  taxes  at  different  rates  on  the  same 
property  at  the  same  time.  This  is  a  perfect  example  of  a  proper 
double  tax.  This  tax  might  be  a  multiple  tax  and  still  be  perfectly 
justifiable,  and  the  only  objection  which  could  be  properly  made 
would  be  on  the  grounds  of  expense  or  inconvenience,  or  some  other 
reason  which  has  nothing  to  do  with  the  tax  itself.   The  test  in 


22 


BEPOBT  OP  BOABD  OF  TAX  COHMISSIOiaBS. 


this  case  is  the  amount  of  the  tax,  not  how  many  times  the  tax 
M  assessed.  If  the  citizens  of  a  state  prefer  to  raise  the  necessary 
amount  of  revenue  by  several  levies  on  the  same  ^opwty  instead  of 
one,  it  may  be  expensive  and  inconvenient,  but  it  is  not  unjust  from 
the  eeoncmiie  or  moral  standpoint. 

A  similar  condition  is  brought  about  by  a  Federal  and  a  state 
income  tax.  There  is  no  vaUd  objection  on  the  ground  of  double 
taxation  m  this  case.  Real  estate  taxed  in  one  state  and  the  income 
from  It  taxed  in  another-the  domicile  of  the  o*ner-^  also  perfectly 
justifiable  legaUy  and  economicaUy.  Double  taxation  of  these 
kinds  is  not  objectionable  and  is  probably  unavoidable. 

These  statements  relative  to  the  taxation  of  personalty  hold  good 
r^arding  the  ordinary  forms  of  state  and  local  taxation  of  property 
generaUy.  They  do  not  apply,  however,  to  inheritance  taxes.  If 
an  mheritance  tax  is  held  to  be  a  tax  on  a  civil  right  or  privily  it 
should  be  levied  but  once.  Taxes  on  the  same  inheritance  by  more 
than  one  jurisdiction  do  not  appear  to  be  justifiable  economically. 

An  example  of  objectionable  and  avoidable  double  taxation  is 
afforded  by  the  taxation  of  wealth  in  one  state  and  the  evidences  of 
wealth  in  anoth«-.  A  corporation  may  be  taxed  upon  its  entire 
property  and  the  holders  of  its  securities  also  taxed  at  their  fuU 
value  by  the  same  jurisdiction  at  the  same  time  and  rate,  or  these 
securities  may  be  scattered  throughout  many  states  and  taxed 
according  to  the  domicile  of  the  owners  at  approximately  the 
same  rate. 

As  thwe  are  no  constitutional  limitations  upon  the  levying  of  an 
inheritance  tax  upon  personal  property  both  by  the  state  in  which  the 
property  may  be  considered  to  be  located  and  the  state  of  domicile 
of  the  former  owner,  double  taxation  may  and  does  occur  to  a  great 
and  even  distressing  extent.  There  are  of  course  other  considerations 
than  domicile  of  the  former  owner,  and  situs  independent  of  such 
donucde,  which  may  detennine  jurisdiction,  but  these  two  conditions 
are  the  only  ones  used  in  the  United  States.  Some  states  impose 
nheritance  taxes  according  to  the  situs  of  the  physical  property 


BEPOBT  OF  BOABD  OF  TAX  COmOSSIONEBS 


23 


others  according  to  domicile,  and  still  others  according  to  the 
location  of  the  securities.  The  legal  and  constitutional  right  to 
impose  each  of  these  taxes  is  clear  and  well  established,  and  the 
economic  injustice  is  equally  clear. 

An  example  of  the  foregoing  is  furnished  by  a  corporation  incor- 
porated and  owning  property  in  one  state,  a  part  or  even  the  whole 
of  the  stock  and  bonds  owned  by  residents  of  another,  and  the  secu- 
rities kept  in  still  a  third  state.  This  combination  of  circumstances, 
by  no  means  rare  in  practice,  furnishes  an  opportunity  for  multiple 
taxation. 

''No  doubt  it  would  be  of  great  advantage  to  the  country  and  to 
the  individual  states  if  principles  of  taxation  could  be  agreed  upon 

which  did  not  conflict  with  others,  and  a  common  scheme  could  be 
adopted  by  which  taxation  of  substantially  the  same  property  in  two 
jurisdictions  could  be  avoided,  but  the  constitution  of  the  United 
States  did  not  go  so  far,  and  a  state  was  not  bound  to  make  its  tax 
laws  harmonious  in  principle  with  those  of  other  states."* 

States  which  have  large  amounts  of  corporate  property  within 
their  jurisdiction,  with  the  stocks  and  bonds  of  the  corporation 
owning  the  property  held  wholly  or  in  large  part  by  non-residents, 
lean  perhaps  naturally  to  the  theory  that  the  situs  of  the  property 
should  determine  the  imposition  of  the  inheritance  tax.  This  theory  is 
carried  out  in  the  laws  of  a  number  of  states,  and  those  maintaining  it 
argue  in  substance,  in  sustaining  their  position,  that  while  the  tax  is 
l^ally  a  tax  upon  the  transfer  of  property  and  not  upon  the  property, 
the  tax  is  nevertheless  measured  by  the  value  of  the  property  and 
is  usually  made  a  lien  upon  it,  and  the  burden  falls  ultimately  upon 
and  is  borne  by  the  property.  They  argue  further  that  taxation  is 
for  the  maintenance  of  government,  and  as  the  chief  purpose  of 
government  is  the  protection  of  property  and  the  administration  and 
enforcement  of  the  laws  of  property,  therefore  the  tax  which  is  borne 
by  property  within  a  given  jurisdiction  shotild  accrue  to  the  use 
of  that  jurisdiction,  whether  levied  upon  the  transfer,  devise,  suooes- 
sion,  interest  therdn,  or  property  itself. 


*Kidd  VB.  Alabama.  188  U.  S.  730. 


24 


KEPOBT  OP  BOARD  OF  TAX  COMMISSIONEBS. 


The  difficulty  of  drafting  and  administering  an  inheritance  tax 
law  based  on  this  principle  is  generally  admitted  to  be  great  and  by 
wme  It  18  considered  practicaUy  insurmountable.  Mr.  Lawson  Purdy 
Pres.dent  of  the  Department  of  Ta^es  and  Assessments  for  the  CiS 
of  New  Yorl^  in  a  discussion  of  the  subject  said  that  to  administer  a 
teanrfer  tax  drafted  thoroughly  in  accordance  with  this  theory  would 

attempt  has  been 

inade  to  adrnm^ter  such  a  law  the  difficulties  encountered  have  been 
very  considerable,  to  say  the  least. 

The  Coirect  Principle. 

The  weight  of  authority,  both  legal  and  economic,  in  the  United 
btates  does  not  seem  to  sustain  this  line  of  argument: 

se^I  ?L'?w*rr'  ^^'^  ''oa^idered  to  be  a  tax  on  privUege  it 
aeems  c  «ir  that  the  sovereignty  which  confers  the  privilege  stould 
unpose  the  tax.   The  great  weight  of  authority  in  the  S  SteS 

owner  s  domicilp  snv^ 
^Sri  P^"^  P'^'P^^y-  the  law  of  the  place 

The  relative  merits  of  imposing  inheritance  taxes  according  to  the 
situs  of  the  personalty  and  the  domicile  of  the  former  owner  an> 
aWy  treated  in  the  report  of  the  Committee  on  Double  Taxation  and 
atus  for  the  purposes  of  taxation  made  to  the  Ninth  National  Tax 
Confamce.   The  Committee  says: 

inh^L  l>eKeye  that  the  correct  principle  underlying  taxation  of 

^^i^T  V^'  'u'         ^'^'''•^  devolution  of 

V'"^       iaheritance  tax  thereon.   If  this  principte 
18  adopted  most  questions  of  situs  with  relation  to  inheritan^  tex! 

the  kws  of  the  state  m  which  it  is  situated.  Personal  prooertv 
devolves  m  accordance  with  the  laws  of  the  state  of  domi  iL  of  the 
fonner  owner.   Applying  the  principle  stated,  it  folJaL  rtj 


BBPOBT  OF  BOABD  OF  TAX  OOMMISSlpNlIBS. 


25 


estate  should  be  taxed  by  the  state  in  which  it  is  situated;  personal 
property  by  the  state  in  which  its  former  owner  was  domiciled." 

A  brief  summary  of  the  arguments  sastainmg  their  conclusions 
relative  to  personal  property  follows : 

Against  taxation  of  personal  property  according  to  situs: — ^Personal 
property  may  be  said  to  have  a  situs  for  taxation  in  several  states 
other  than  that  of  domicile.  Extent  of  power  to  impose  inheritance 
taxes  on  personal  property  on  ground  of  situs  not  det^mined,  a 
serious  objection.  Does  not  avoid  double  taxation.  Difficulty  of 
drafting  law  based  on  taxation  according  to  situ^.  Administrative 
difficulties  and  cost  of  collection.  Large  number  of  states  may  be 
involved  in  settlement  of  one  comparatively  small  estate.  Involves 
dealing  with  fractional  parts  oi  estates  rather  than  the  whole. 
Increases  number  and  decreases  sise  of  estates  taxed.  Difficulty  in 
apportioning  indebtedness  and  exemptions.  Annoyance,  delay 
and  expense  to  taaq>ayers.  Requires  ancillary  administration  in 
each  state  ndiere  personal  property  is  located.  Burden  to  taxpayer 
greater  than  resultant  advantage  to  taxing  state.  Especially  inappli- 
cable when  progressive  rates  are  employed.  InequaUties  arise 
between  tax  on  residents  and  n<ni-reBidentB|  favoring  latter.  Bad 
effects  on  investments. 

For  taxation  of  personal  property  according  to  donucile: — Avoids 
double  taxation.  Question  of  domicile  sddom  arises.  Adjustment 
of  taxes  not  very  difficult.  In  accordance  with  fundamental  legal 
theory.  Reduces  necessity  for  ancillary  administration  to  a  mini- 
mum. Simplifies  administration,  avdds  dday  and  expense  to 
taxpayers  and  state  alike.  Power  to  transmit  or  receive  granted 
or  may  be  regulated  by  state  of  domicile,  therefore  state  of  domicile 
should  regulate  tax.  Deals  with  estates  as  a  whole,  but  one  set  of 
rates  and  exemptions  to  be  adjusted  and  but  one  appraisal  to  be 
made.   Has  less  effect  on  investments. 

Administration. 

The  practices  as  to  administration  show  a  great  variation  in  tiie 

several  states.    These  are  of  minor  consequence  as  they  are 


26 


BBPOBT  OP  BOABD  OP  TAX  COMMISSIONEBS. 


determined  largely,  if  not  entirely,  by  considemtioiis  purely  local 
in  character.   Each  state  must  necessarily  comply,  so  far  as  pos- 
able,  with  existing  practices,  and  much  may  be  found  in  the  laws 
of  one  state  which  is  admirable,  but  which  would  be  worse  than  use- 
1^  if  transferred  to  another.   Administration  must  conform  to 
the  conditions  existing  in  the  particular  state  to  which  it  is  to  apply 
and  whUe  much  assistance  may  be  derived  from  a  careful  study 
of  administrative  methods  in  other  states,  very  little,  if  anything 
has  been  found  which  could  be  taken  bodily  and  incorporated  mU> 
our  law. 

The  Proposed  Law, 

The  Board  of  Tax  Commissioners  has  endeavored  to  ascertain,  so 
far  as  possible,  the  difficulties  incident  to  the  administration  of  in- 
iMsritance  tax  laws  in  other  states,  and  to  so  frame  the  proposed  law 
submitted  herewith  as  to  avoid  them.   Much  oomphdnt  is  made 
by  admmistrators  and  trustees  generally  regarding  what  appear  to  be 
unnecessaiy  delays  and  expense  in  the  settlement  of  estates  due  to 
certam  provisions,  regarding  the  filing  of  inventories  and  the  appoint- 
ment  of  appraiser,  found  m  the  laws  of  some  states,  and  an  effort  has 
been  made  to  avoid  these  difficulties  entirely,  if  possible,  and  if  not 
to  reduce  them  substantially.  ' 

Considerable  annoyance  has  been  caused  m  some  states  by  imposing 
upon  the  courts  exercising  probate  jurisdiction  the  duty  of  assesmng 
the  inheritance  tax.  This  appears  to  be  wrong  in  theory  and  bad  in 
practice,asthe  assessmentof  taxesisnota  judicial  function.  Except 
m  so  far  as  probate  courts  are  required  to  furnish  certified  copies  of 
documents,  and  to  satisfy  themselves  that  the  required  tax  has  been 
adjusted  m  accord^ce  with  the  hiw,  no  change  in  our  probate  laws 
has  been  made,  and  no  new  duties,  either  expressed  or  impUed,  have 
been  imposed  upon  the  probate  courts,  by  the  proposed  kw. 

The  provision  found  m  some  kws,  which  makes  the  tax  a  Hen  upon 
mtangible  personalty,  is  severely  criticised  as  putting  a  cloud  upon  the 
title  to  securities  ahnost,  if  not  quite,  impossible  to  trace,  and  adminis. 


trators  and  trustees  cannot  transfer  securities  without  exasperating 
delays  and  uncertainties.  These  difficulties  have  been  avoided  by 
allowing  no  lien  for  the  tax  upon  personalty,  but  a  fine  is  imposed 
upon  the  transferring  agency  for  the  transfer  of  securities  upon  which 
the  tax  has  not  been  paid,  and  provision  has  been  made  for  promptly 
and  easily  ascertaining  whether  there  is  liability  to  the  tax  and  whether 
it  has  been  paid  or  not.  The  state  appears  to  be  amply  protected 
by  thisprovifflon,  and  the  question  of  defective  title  to  aecurilaes  upon 
which  the  tax  has  not  been  paid  is  removed. 

The  questions  involving  jurisdiction,  which  have  in  many  instances 
caused  troublesome  and  expensive  delays,  it  is  anticipated  will  be 
greatly  reduced  in  number  and  importance  by  the  provision  of  the 
law  fixiitg  the  domicile  of  the  former  owner  as  the  situs  for  taxation 
<^  personalty.  This  provision  appears  to  be  in  line  with  the  best 
practice  and  thought  on  the  subject. 

The  exiemption  to  members  of  the  first  class — $25,000 — is  so  large 
that  in  very  many  cases,  unless  strangers  in  blood  are  involved,  there 
will  be  only  a  tax  on  the  net  estate  to  be  adjusted,  a  flat  tax  of  one- 
half  of  one  per  cent,  on  the  net  estate  in  excess  of  $5,000.  It  is 
confidently  expected  that  this  provision  will  prove  of  great  advantage 
in  avoiding  delay  and  expense  in  the  administration  «f  small  estates, 
with  no  consequent  loss  to  the  state. 

Ample  time  has  been  allowed  for  the  payment  of  the  tax  before 
interest  is  charged,  and  a  substantial  discount  given  for  prompt 
pasrment.  The  exemption  allowed  to  members  of  the  first  class  is 
the  largest  and  the  rates  upon  legacies  up  to  $100,000  to  members  of 
the  first  class  are  the  lowest  provided  in  any  state  taxing  direct 
inheritances. 

Provision  is  made  for  prompt  appnusal  in  case  of  disagre^ent,  and 

for  the  adjustment  of  indeterminate  taxes  in  a  manner  which  appears 
to  amply  protect  the  state  and  avoids  delay  and  expense  to  the  estate. 

Non-resident  deced^ts  are  taxed  only  upon  laransfm  of  real 
estate,  or  an  interest  therein,  and  ample  provision  has  been  made  for 
determining  the  exemptions  to  be  allowed,  and  indebtedness  to  be 

9 


28 


BWOTT  OF  BOABD  0»  1!&Z  OOlOflSSIONEBS. 


deducted,  in  the  determination  of  tlie  net  estate  and  legacies  without 
troublesome  compUcations  or  annoying  delays.  Appeal  may  be 
tabsn  fnm  dedsionB  of  the  Board  to  the  Superior  Court  sitting  in 
Providence. 

Reasons  for  Its  Adoption  Entirely  Fiscal. 

The  consideration  given  to  the  subject  of  Inheritance  taxation  in 
compliance  with  your  Excellency's  request  has  been  entirely  fran  the 
standpomt  of  revenue.   The  propoeed  law  is  recommended  because 
It  provides  a  just  and  convenient  means  of  raising  revenue.  The 
proposed  rates  are  so  low  and  the  esemptions  so  large  that,  in  tho 
h^t  of  the  experience  of  other  countries  and  other  states,  the  law 
inU  hay»  BO  social  tfeeto;  as  a  controlling  or  limiting  factor,  either 
m  the  accumulation  or  distribution  of  wealth,  it  wiU  be  negligible 
Theratee  and  exemptions  are  such  that  they  are  justified  on  purely 
fiMaoal  grooiMb,  even  in  the  case  of  the  highest  rate  applied  to 
strangers  in  blood.   The  draft  of  the  proposed  law  fa  herewith 
submitted: 

It  w  enacted  by  the  General  Assembly  as  follows: 
on  net  esfaile-^late,  ezcnvliQii. 

J^TZUt  ""f^  be  «„1  iB  hereby  impoBed  upon  the  net  estate  of 
T^J^!^  «d  "P«  the  Bet  ertrte  of  no,»eBident  decedents  consisting 

Such  tax  shall  be  imposed  at  the  rate  of  one-half  of  one  per  oentom  upon 
the  excess  value  of  aU  said  estates  owr  «,000:  PrcviM,  that  only  «.ch  pZ 
poruon  of  «„i  exemption  of  »6,000  Aril  be  flowed  «t.te.  of  non-resident 
d»jenta«  the  ^  of  the  red  ptoperty  1^^ 

ttewn.  beM.  to  the  entire  ertrte  whereyer  located;  and  provided  further,  that 
the  e»euW,  «hn«urtr«tor  or  trustee  of  such  non-resident  decedent's  estate 
T,T  T,        .  Commissioners  duly  certified  statements  edaWtin* 

the  full  and  fmr  caah  value  of  the  entire  estate.   If  ««d  rtatemsnti  ne  not  fifed 
as  herem  provided,  no  exemptim  shaU  be  aUowed. 


REPORT  OF  BOARD  OF  TAX  COMMISS 

Net  estate,  tiow  ascertained. 

Sbo.  2.  The  net  estate  of  iwidentdeoedeiits  for  the  asBBsnnent  of 
be  asoertained  by  adding  to  the  appiaind  Yalue  of  tibe  inventoried  estate,  as  deter- 
mined by  the  Board  of  Tax  Gommissionen,  all  gains  made  in  reducing  intangible 

property  to  possession,  except  shares  of  stock  in  any  corporation  and  income  accru- 
ing after  death,  and  deducting  therefrom  the  amount  of  claims  paid,  all  funeral 
eKfmnfm  and  expenses  of  administration,  allowance  made  for  the  support  of  widow 
•ad  family  of  the  decedent  during  the  settlement  of  the  estate,  as  fixed  by  the 
probate  court  according  to  law,  the  amount  at  death  of  all  unpaid  mortgages  not 
deducted  in  the  appraisal  of  property  mortgaged,  and  losses  incurred  during  the 
settlement  of  the  estate  in  the  reduction  of  intangible  property  to  possession,  except 
shares  of  stock  in  any  corporation:  Provided,  that  no  such  deduction  shall  be  made 
for  allowance  for  support  of  widow  and  family  beyond  the  date  upon  which  the  tax 
hereby  imposed  becomes  payable.  The  net  estate  of  non-resident  decedents,  for 
the  asnsnnNit  of  this  tax,  shall  be  ascertained  by  deducting  from  the  appraised 
Talae  of  the  real  property  loeated  in  Rhode  Island,  as  determined  by  the  Board  of 

Tax  OmmilnioiMn,  such  proportion  of  the  indebtedness  of  the  entire  estate  of 
said  non-resident  decedent  as  the  value  of  said  real  property  and  any  tangible 

personal  property  located  within  Rhode  Island  bears  to  the  value  of  the  entire 
estate:  Provided,  that  only  the  excess  of  such  proportion  of  indebtedness  over 
and  above  the  value  of  said  tangible  personal  property  shall  be  deducted  from  the 
i^ypraised  value  of  said  real  property;  and  provided  further,  that  the  executor, 
administratar,  or  trustee,  of  sudi  noBHKaident  decedent's  estate  files  with  the 
Board  of  Tax  Ck>nmii8Bioneniduly  cntffied  statemente  exiubilmg  the  full  and  fair 
cash  value  of  the  eaiiie  estate  and  the  indebtedness  for  which  said  estate  has  been 
adjudged  liable.  K  said  statements  are  not  filed  as  her^  provided,  only  such 
debts  and  expenses  as  are  chargeable  to  the  said  real  property  under  the  laws  of 
this  State  shall  be  deducted. 

Assessment,  taxes  payable,  notice,  certification,  lien,  deposit. 

Sec.  3.  The  tax  imposed  by  Section  1  of  this  act  shall  be  assessed  upon  the 
full  and  fair  cash  value  of  the  net  estate  by  the  Board  of  Tax  Conmiissioners  as 
h^einbefore  provided  and  notice  of  the  amoimt  of  said  tax  shall  be  mailed  to  the 
executor,  administraUHr,  or  trustee  by  said  board,  but  failure  to  receive  said 
notice  shall  not  excuse  the  non-payment  of  or  invalidate  said  tax.  The  Board  of 
Tax  Gommissionen  diaH  certify  the  amount  ci  such  tax  to  the  general  treasurer 
who  shall  receive  and  collect  the  taxes  so  assessed  in  the  same  manner  and  with 
the  same  powers  as  are  prescribed  for  and  given  to  the  collectors  of  taxes  by 
Chspter  60  of  the  General  Laws  and  by  any  acts  in  amendment  thereof  or  in 


30 


BBPOBT  OF  BOABO  OF  TAX  COMlIISSIONliBS. 


addrt«»tl««to.  8«aht«4.U  be  due  «dpayrfJe  by  the  executor,  adminis. 
^  JfZ     ^  tomediately  upon  notification  of  the  amount 

«d  rf  not  p«d  wfthin  thirty  days  thereafter  shall  bear  interest  at  the 

t     V  «u     ^  ^''^        °f  ^"<^'>  notifiotion.  Said 

tax  BhaD  be  paid  direct  to  the  general  treasurer  of  the  State  for  the  uae  of  the  State, 
and  shall  be  and  remain  aHea„ponthe«.t«teuntathe«BeAaBbepaid,an<^ 
he  executors,  administrators,  or  trusteea  d>aU  be  pe»onaIIy  liable  for  ^Th  tax 

^  '*""^'~«*"'«*"°^*».<»tn»tee  may  deposit 

the  ^anerri  to«„rer  a  «un  of  mon^  sufficient  in  the  opinion  of  the  Board  of 

of  Sectmn  1  of  this  act,  and  when  said  tax  has  been  determined  and  oertilW  a. 
rfo,»a,d  the  general  treasurer  shaU  repay  to  said  executor,  adminirtrator.  or 
tnistee  the  difference  between  the  tax  certified  ..d  the  a™»nt  *po«ted,  ^ 
^^Zlt^  "^"^  i-PO-d  ahan  be  di«*a.^  JZ.^ 

Debte  proved  after  payment,  iwpeai  fnni  asMsowiiL 

Smo.  4.  Wh«iever  debts  shall  be  proved  against  the  estate  of  a  decedent  after 
the  payment  of  the  tax  imposed  by  Section  1  of  this  act  the  sen.r.1  twaauier 
ehaU  upon  receiving  a  certified  copy  of  the  of  the  pwhrte  ooort «  other 

court  o  competent  juririicti™.  dHwing  the  proof  of  said  debt..  «rfund  such 

-dminirtrator,  or  trustee  without 
Zll"fL  »  "dotation  making  appropriation  therefor.  Any  executor, 
•«>»»»«nrtor,  or  tmrtee  nuiy  M>pe.l  from  the  assessment  of  said  tax  aa  provided 
m  Section  27  of  this  act.  «      as  provwea 

Tax  on  transfer. 

Sec.  5  A  tax  shall  be  and  is  hereby  impoawl  upon  the  transfer  of  any  nroD- 
erty,  real,  tangible,  or  intangible.  «  upon  «v  int«rt  th«in  or  income  tW 

ftom.  mtrurt  or  oth«nri»,  to  person..  a-KH»«ti^ 
upon  the  niJit  to  receive,  in  the  frfkwring  ease.:  . 

(I)   When  the  transfer  is  by  wiU  or  by  the  intertate  law.  of  thi.  Stat,  of 
leal,  tangib  e,  or  mtangible  property  &om  «.y  pe«m  dying  «i.ed  and  pos««d 
thereof  while  a  resident  of  the  State.  "pnnnmnoa 

Nso-rcsident 

8t^  ^  ^Tf^  ""^      *  ^^^y     Wn  the 

State  «rf  the  deeed«t  wa.  a  noweAlent  of  the  State  at  the  time  of  his  death. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERSv  <  ,  31 

In  contemplatioii  of  death. 

(9)  When  the  transfer  is  of  real,  tangible,  or  intangible  property  within  the 
State  made  by  a  resident,  or  of  real  property  within  the  State  made  by  a  non- 
resident by  deed,  grant,  bargain,  sale,  or  gift  made  in  contemplation  of  death  of 
the  grantor,  vendor  or  donor,  or  intended  to  take  effect  in  possession  or  enjoy- 
ment at  or  after  such  death.  Such  tax  shall  be  imposed  when  any  such  person^ 
anoeiation,  or  ooipofation  beoomes  beneficially  entitled,  in  possession  or  expect- 
ancy, to  any  pnpertj,  or  interest  therem,  or  the  income  therefrom  by  any  such 
transfer,  whether  made  before  or  after  the  passage  of  Una  act. 

By  appointmeBl. 

(4)  Whenever  any  person  or  corporation  shall  exercise  a  power  of  appoint- 
ment, derived  from  any  disposition  of  property  made  whether  before  or  after  the 
passage  of  this  act,  such  appointment  when  made  shall  be  deemed  a  transfer 
taxable  under  the  provisions  of  this  act  in  the  same  manner  as  though  the  property 
to  which  such  appointment  relates  bdonged  absolutely  to  the  donee  of  sodi  power 
and  had  been  bequeathed  or  devised  by  such  donee  by  wOl;  and  i^dienever  any 
person  possessing  sudi  a  power  of  appcnntment  so  derived  shall  omit  or  fail  to 
exercise  the  same  within  the  time  provided  therefor,  in  whole  or  in  part,  a  transfer 
taxable  under  the  provisions  of  this  act  shall  be  deemed  to  take  place  to  the 
extent  of  such  omission  or  failure,  in  the  same  Tn^^nnftr  as  though  the  person 
thereby  becoming  entitled  to  the  possession  or  enjoyment  ot  the  property  to 
which  such  power  related  had  fuooeeded  thereto  by  a  wffl  of  the  d<niee  of  the 
power  failing  to  eseraae  soeh  power,  and  shall  take  effect  at  ik»  time  of  such 
omission  or  failure. 

Assessment,  taxes  payaUe,  notice,  certification,  lien,  liability. 

Sec.  6.  All  taxes  imposed  by  Section  5  of  this  act  shall  be  assessed  by  the 
Board  of  Tax  Commissioners  upon  the  full  and  fair  cash  value  of  the  property 
transferred  at  the  rate  hereinafter  described  and  only  upon  the  excess  of  the 
exemption  hereinafter  granted,  to  be  paid  direct  to  the  general  treasurer  of  the 
State,  for  the  use  of  the  State,  and  all  executors,  administaators,  or  trustees  shall 
be  personally  liable  for  any  and  all  sudi  taxes  until  the  same  are  paid.  Notice 
of  the  amount  of  said  taxes  shaU  be  mafled  to  the  executor,  administrator,  or 
trustee,  by  said  board,  and  upon  request  made  to  them  to  any  other  person  by 
whom  said  taxes  are  payable,  but  failure  to  receive  said  notice  shall  not  excuse  the 
non-payment  of  or  invalidate  said  taxes;  and  unless  appeal  is  taken  from  such 
assessment,  as  hereinafter  provided,  the  amount  of  turn  m  aaeessed  shall  be 
final.  Said  board  shall  certify  the  amount  of  such  taxes  to  the  general  treasmcr 
who  shall  fecehre  and  coOeet  the  taxes  so  Bssesied  in  the  same  manner  and  with 


mroafT  of  bqaw  of  tax  gommissionbbs.  ' 

the  iame  powers  as  are  prawribed  for  and  given  to  the  coUectorsof  taxes  bv 
Cai^ter  00  <rf  the  Geoeral  Laws,  and  by  any  acts  in  amendment  thereof  or  in 
addition  thereto.  Payment  of  the  amount  so  certified  shall  be  a  discharge  of  the 
tax.  Said  taxes  shall  be  and  remain  a  hen  upon  the  property  transferred,  and 
upon  all  property  acquired  by  the  executor,  administrator,  or  trustee  in  substitu- 
tion therefor  while  the  same  remains  in  his  hands,  until  the  said  taxes  are  paid  or 
a  bond  mm  as  heronafter  movided,  but  said  Uoi  shall  not  affect  any  tangible 
or  intangible  pcnonal  property  after  it  has  passed  to  bona  fide  purchaser  for 
vahie:  Prmnded,  however,  tiiat  nothing  herein  contained  shall  give  the  owner  of  any 
•ecurities  specified  in  Section  28  of  this  act  the  right  to  have  the  same  transferred 
to  him  by  the  corporation,  association,  company  or  trust  issuing  the  saiUe, 
until  the  certificate  required  by  said  Section  28  shaU  have  been  filed  as  therein 
provided.   The  Uen  charged  as  afofesaid  upon  any  real  estate  or  sqiarate  parcel 

thereof  may  be  discharged  by  the  payment  <rf  an  taxes  due  and  to  become  due  upon 
said  real  estate  OT  siqpawte  paiwl,  or  Iqr  the  filing  and  acc 
provided  in  Section  11  of  tiiis  act,  w  by  an  order  of  the  Boaxd  of  Tax  Commis- 
aooers  tiaasfeRmg  such  lim  to  otiier  real  estate  owned  by  the  person  to  whom  said 
real  estate  or  separate  parcel  thereof  pa^es.  The  heir,  devisee  or  otiier  donee  shall 
be  personally  liable  for  the  tax  on  such  real  estate,  as  well  as  the  executor,  adminis- 

trator,  or  trustee;  and  if  tiie  executor,  admiaistnrifflr,  or  trustee  pays  such  tax,  he 
shaU,  unless  tiie  same  is  made  an  eipense  of  administration  by  the  wiU  or  otiier 
inrtroment,  have  tiie  rii^t  to  recover  such  tax  from  tiie  heir,  devisee  or  otiier 
donee  of  such  real  ertate. 

CbssUicatiQii,  rates  of  taxation. 

Sec.  7.   When  any  property  or  any  beneficial  mt«est  tiierein  or  ineome  tiwre- 
f rom  ShaU  pass  to  or  few  tiie  use  of  any  gnmdpaient,  parent,  husband,  wtf e,  child, 
brother,  sister,  nephew,  niece,  wife  or  widow  of  tiie  scm,  or  husband  or  widower 
of  tiie  daufl^ter,  ot  any  child  adopted  in  conformity  wHh  the  laws  of  Rhode 
Wand,  or  of  any  otiier  state  or  country,  or  any  person  to  whom  the  deceased 
for  not  less  tiian  ten  years  prior  to  death  stood  in  the  acknowledged  reUtion 
of  a  parent,  or  to  any  hneal  descendant  bom  in  lawful  wedlock,  tiie  tax  so 
imposed  ShaU  be  at  the  rate  of  one-half  of  one  per  centum  upon  all  amounto 
m  excess  of  tiie  exemption  hereinafter  qieeifiBd  and  not  exceeding  $50,000; 
•t  tiie  rate  of  one  per  centum  upon  afl  amounte  in  exeen  of  $50,000  and  not  ex- 
«eeeding|250,000rattiierateofoneandone4iatf  per  centum  upon  all  amounte 
in  exeess  of  $250,000  and  not  exceeding  $500,000;  at  the  rate  of  two  per  centum 
1^  an  amounte  in  excess  of  $500,000  and  not  exceeding  $750,000;  at  the  rate 
Of  two  and  one-half  per  centum  upon  all  amounte  in  exoeas  of  $750,000  and  not 


Bxpom  of  boabd  of  tax  coMiassio: 


exeeeding  $1,000,000;  at  the  rate  of  three  per  centum  i^Mm  aB  amounte  in  excess 
of  $1,000,000. 

Sec.  8.  When  any  property  or  any  beneficial  interest  therein  "/f  income  there- 
from shaU  pass  to  or  for  the  use  of  any  person  not  mentioned  in  Section  7  of 
this  act,  or  to  or  for  the  use  of  any  body  politic  or  corporate,  the  tax  so  imposed 
shall  be  at  the  rate  of  five  per  centum  iqion  all  amounte  in  excess  of  the 
enmption  hereinafter  speoified  and  not  eiiSseding  $60*000;  at  the  rate  of  six 
per  centum  uptm  all  amoonte  in  exeess  of  $50,000  and  not  eseeeding  $250,000; 
at  the  rate  of  seven  per  centum  upon  all  amounte  in  excess  of  $250,000  and  not 
exceeding  $1,000,000;  at  the  rate  of  eight  per  centum  upon  aU  amounte  in  excess 
of  $1,000,000. 

Exemptions. 

Sic.  9.  The  following  exemptions  from  the  taxes  imposed  wider  the  pro- 
visions of  this  act  are  hereby  allowed: 

(1)  All  property  transferred  to  any  corporatixm,  association,  or  institution, 
located  in  Rhode  Island,  which  is  exempt  frcnn  taxation  1^  charter  or  under  the 
laws  of  Rhode  Island,  or  to  any  corporation,  association,  or  institirtion,  looated 
outskie  of  Rhode  Island,  ^dik^  if  oonskiered  as  k>eated  within  Kh^ 

be  exempt  as  aforesaid,  or  to  any  person  in  trust  for  the  same,  or  to  any  city  or 
town  in  Rhode  Island  for  pubUc  purposes,  shall  be  exempt. 

(2)  Property  of  a  clear  value  of  $25,000,  to  be  taken  out  of  the  first  $50,000 
transferred  to  each  of  the  persons  mentioned  in  Section  7  id  this  act,  shall  be 
emmpt:  Provided,  that  the  desoendante  of  sueh  persons  diall  be  allowed  the 
exemption  of  the  person  they  represent,  per  stirpes  and  not  per  caiMta. 

(9)  Piroperty  of  a  dear  vahie  of  $1,000,  to  be  takien  out  of  the  first  $50,000 
transferred  to  any  person  or  corporation  other  than  the  peisons  mentioned  in  - 
Section  7  of  this  act,  shall  be  exempt:  Provided,  that  the  descendants  of  any  such 
person  shall  be  allowed  the  exemption  of  the  person  they  represent,  per  stirpes 
and  not  per  capita. 

(4)  In  the  case  of  the  transfer  of  a  non-resident  deoedent's  real  property 
looated  in  Rhode  Island,  at  of  any  interest  therein,  only  soeh  proportion  of  the 
exemptions  herein  specified  shi^  be  aflowed  as  the  value  of  the  transferee's 
share  in  said  real  property,  or  any  interest  therein,  bears  to  the  value  of  said 
transferee's  share  in  the  entire  estate  of  said  non-resident  decedent:  Provided, 
that  the  executor,  administrator,  or  trustee  of  such  non-resident  decedent's 
estete  files  with  the  Board  of  Tax  Commissioners  duly  certified  statemente 
exhU^ting  the  full  and  fair  cash  value  id  the  entire  estate.  If  said  statemente 
are  not  filed  as  herein  ptofided,  no  eaemption  shaQ  be  allowed. 


34  BBPOBT  OP  BOABB  OF  TAX  COMMISSIONERS. 

Taies  payable,  when. 

Stc.  10.  AU  taxes  imposed  by  SeoOon  5  off  this  act,  unless  otherwise  hmin 
provided,  shall  be  due  and  payable  six  nuntths  after  the  date  of  the  filing  of 
thdr  bond  by  any  executor,  administrator  or  trustee  first  appointed,  and  if  paid 
within  said  period  a  discount  of  four  per  centum  shall  be  aUowed  and  deducted 
therefrom.    If  such  tax  is  not  paid  within  nine  months  from  the  accrual  thereof 
interest  shall  be  charged  and  collected  thereon  at  the  rate  of  eight  per  centum  per 
annum  from  the  time  the  tax  accrues,  unless  by  reason  of  dauns  made  upon  the 
estate^  neoessaiy  litigation,  or  other  unavcndable  cause  <rf  delay  such  tax  cannot  be 
determined  aiul  paid  as  herem  provided,  m  which  ease  interest  at  the  rate  of  six 
per  oentum  per  annum  shall  be  chaiged  upon  such  tax  from  the  accrual  thereof 
unto  the  cause  of  such  delay  is  removed,  after  which  eight  per  centum  per  annum 
shall  be  charged :  Provided,  that  litigation  to  defeat  the  payment  of  such  tax  shall 
not  be  considered  necessary  litigation. 

Election  to  postpone  payment  in  certain  cases. 

Sbc.  11.   Any  executor,  administrator,  or  trustee,  or  any  person  or  persons 
beneficially  interested  in  property  chargeable  with  a  tax  under  the  provisions  of 
Section  5  of  this  act,  may  elect,  with  the  approval  of  the  Board  of  Tax  Commi»- 
sioners,  not  to  pay  the  same  until  the  perscm  or  persons  beneficially  interested  shall 
come  into  actual  possessioii  or  oijqymait  of  such  property;  in  wlueh  case  such 
executor,  administrator,  or  trustee,  cw  said  person  <»  persons  beneficiaUy  interested 
fliiall  give  bond  to  the  genenl  treasurer  m  a  penal  sum  three  times  the  amount  of 
the  said  tax  with  such  sureties  as  the  general  treasurer  may  approve,  conditioned 
for  the  payment  of  the  said  tax  and  interest  thereon  at  the  rate  of  four  per  centum 
per  annum  at  such  time  or  period  as  such  beneficiaries  or  theur  representatives 
may  come  into  actual  possession  or  enjoyment  of  said  property,  and  also  with  the 
c<»idition  that  the  oMigpr  shall  notify  the  Board  of  fSftmmiifymffB 
time  or  period  of  actual  possession  or  enjoyment  arrives.   Said  bond  shall  be 
renewed  every  five  years  after  the  filing  thereof.  The  acceptance  of  such  bond  by 
the  general  treasurer  shall  discharge  all  liens  for  the  tax  covered  thereby  upon  the 
property  of  the  decedent,  and  shall  also  discharge  the  executors,  administrators, 
or  trustees  from  personal  liabiUty  for  said  tax,  exo^t  under  the  temis  of  said  bond. 

Debts  proved  after  distributioii. 

Sbc.  12.  Whenever  debts  shall  be  proved  against  the  estate  of  a  decedent 
after  distribution  of  legacies  from  which  the  inheritance  tax  has  been  deducted  in 
compliance  with  this  act,  and  the  legatee  is  required  to  refund  any  portion  of  the 
lega<7,  a  due  proportion  of  said  tax  shaU  be  repaid  to  him  by  the  executor,  admin- 


{ 
\ 

BBPORT  OF  BOABB  OV  TAX  CCMOfiaSIONEBS. 

istrator  or  trustee  if  the  said  tax  has  not  been  paid  into  the  State  treasury;  and-' 
if  the  said  tax  has  been  paid  into  the  State  treasury  the  general  treasurer  shall 

upon  receiving  a  certified  copy  of  the  records  of  the  probate  court  or  other  court  of 
competent  jurisdiction  showing  the  proof  of  said  debts,  refund  such  equitable 
proportion  of  the  tax  to  the  executor,  administrator,  ot  trustee  without  any  further 
act  or  nsohitioD  malring  appropriation  therefor. 

Life  estates  and  remainders. 

Stoo.  13.  When  any  property  cht  interest  therein  oft  mocmie  there&om  shall 
pass  or  be  limited  for  the  life  of  another,  or  for  a  term  of  years,  or  to  terminate  on 
the  expiration  of  a  certain  period,  the  property  of  a  decedent  so  passing  shall  be 
appraised  immediately  after  the  death  of  the  decedent,  and  the  value  of  the  sa^d 
life  estate,  term  of  years,  or  period  of  limitation  shall  be  fixed  upon  the  combined 
Anmican  experience  tables  of  mortality  with  interest  at  five  pw  centum  par 
annum;  and  the  vahie  of  tiie  remainder  in  said  pn^Mrty  so  lunited  diaU  be  ascer- 
tained by  deducting  the  value  of  the  said  life  estate,  term  di  years,  or  period  of 
limitation  from  the  fahr  cash  value  of  the  property  so  limited;  and  the  tax  on  the 
said  estate  or  estates,  remainder  or  remainders,  interest  or  interests  shall  be 
immediately  due  and  payable,  and  remain  a  lien  upon  the  entire  property  limited 
until  paid. 

Contfaigeiit  trantfcfs. 

Sbc.  14.  In  i^praimig  the  vahie  of  any  jmiperty,  or  interest  tiiermn,  or  in^ 

therefrom,  to  the  boieficial  enjosrment  whereof  there  are  persona  presently 

entitled  thereto,  no  allowance  shall  be  made  in  respect  of  any  contingency  upcm 

the  happening  of  which  the  property,  or  interest  therein,  or  income  therefrom  might 

be  abridged,  defeated  or  diminished:    Provided,  however,  that  in  the  event  of  such 

contingency  taking  effect  as  an  actual  burden  upon  the  interest  of  the  beneficiary, 

either  in  abridging,  defeating,  or  diminishing  the  property,  or  interest  therein,  or 

income  therefrom  as  aforesaid,  a  return  dull  be  made  to  the  person  pn^ierly 

entitled  thereto  of  a  proportionate  amount  of  the  tax  theretc^ore  paid  iqx>n  said 

property,  in  respect  of  the  amount  or  value  of  the  contingency  when  taking  effect,. 

or  so  much  as  will  reduce  the  same  to  the  amount  which  would  have  been  assessed 

in  respect  of  the  actual  duration  or  extent  of  the  interest  enjoyed.    Such  refund 

shall  be  made  by  the  general  treasurer,  upon  notification  by  the  Board  of  Tax 

Commissioners  of  the  correct  amount  thereof,  without  any  further  act  or  resolur 

tion  makmg  iq[>propriation  therefor.  The  foregoing  provisions  shall  not  apply 

to  an  estate  for  life  at  for  years  iHiidi  can  be  abridged,  defeated  ot  dimmished  by 

the  act  or  omission  of  the  legatee  or  devisee;  sudi  estates  idiaU  be  taxed  as  if  thm 

were  no  possibihty  of  such  abridging,  defeating  or  diminishing. 
10 


36  BBFOBT  OF  BOABD  OF  TAX  COMMISSIONBBS. 

J»c.  15.  When  property  is  transferred  or  limited,  in  trust  or  otherwiM. 
«nd  the  nghte,  interests,  or  estates  of  the  transferees  or  beDefioiMie.  «•  depeDd- 
"P°°  contingencies  or  conditions  whewby  they  be  wholly  or  in  part 
created  defeated,  extended  or  rfmdprf,  a  t«t  duJl  be  impo«rf  upon  ™,oh  tran.. 
fer  at  the  lowert  rate  whieh  on  the  happening  of  «,y  said  contingencies  or  con- 
&t»n»  would  be  po»Ue  under  the  provision,  of  this  act,  and  such  tax  so  imposed 
djan  be  due  and  payable  forthwith  by  the  executors  or  trustees  out  of  the  p«>p. 
«ty  tanrferred:  Pr<mded,  however,  that  on  the  happening  of  any  continr«oy  or 
condition  whereby  said  property  or  any  part  thereof  i.  t»naf.™d  to  a  pen»n 
who,  under  the  provisions  of  this  act,  ia  required  to  pay  a  tax  at  a  higher  wte 
than  thet«  unpoeed.  then  ««h  4dl  pay  the  diff«ence  between  the 

TTIJlt?  "T^  tax  at  the  higher  rrte,  and  the  amount  of  such  increased 
*«  shaU  be  eofowed  and  e<Jleeted  as  provided  in  this  act. 

^.  16.  Estates  in  expectancy  which  are  contingent  w  defeasible  and  in 
which  proceedings  for  determination  of  the  tax  have  not  been  taken  or  yA^m  the 
taxation  thereof  has  been  held  in  ab«y>«ie  ahaO  be  tvpnmA  at  their  fuU  and 
fair  cash  value  when  the  pennns  entitled  thereto  ahaD  eome  into  beneficial  enjoy- 
«at  or  poeKMion  thererf,  withootdiBiinuticm  for  or  on  account  of  any  valuation 
h«tof0K,  made  of  the  particuhir  ortate  for  the  purpose  of  taxation  upon  which 
•aid  estate  in  expectancy  may  be  limited. 

Bequest*  to  executors. 

Swj.  17.  Whenever  a  dededentawKunts  one  or  more  exeeufaOT  or  tenstees  and 
m  heu  of  theu-  allowances  or  commissions  makes  a  bequest  or  devise  of  property 
to  them  which  would  otherwise  be  Hable  to  a  tax  under  this  act,  or  appointe 
them  his  residuary  legatees,  and  said  bequests,  devises  or  residuary  legacies 
Moeed  what  would  be  a  reasonable  compensation  for  their  servieei,  asdetermined 
by  hiw,  such  excess  shaU  be  taxable  under  the  provisions  <rf  tiiis  aet 

Dedodion  and  retenUon  of  tax  in  certain  cases. 

•  ^\  the  Win  or  Other  instrmnent  under  which  any  gift  or  transfer 

IS  n»de  Shan  direct  the  taxes  imposed  by  Section  5  of  this  act  to  be  paid  from  the 
residue  or  as  an  expense  of  administration,  and  the  residue  is  suffident  to  pay  sodl 
taxes,  the  following  provisions  shaU  apply.  Any  executor,  admmistnrtor. 
or  trustee  havmg  in  charge  or  in  trust  any  legacy  or  property  for  distribution 
subject  to  tax  under  Section  6  of  this  act  shaU  deduct  the  tax  therefrom  If 
such  legacy  or  p«,perty  be  not  in  monqr.  he  shan  coHect  the  tax  thereon  upon  the 
appraund  value  thereof  from  the  person  entitled  thereto.  He  shall  not  deUver 
or  be  compeUed  to  deliver  any  specific  legacy  or  property  subject  to  tax  under 


t 

BEPOBT  OF  BOARD  OF  TAX  COBOnSSIONEB^*.        ^  37 

Section  5  of  this  act  to  any  person  until  he  shall  have  collected  the  tax  thereon. 
If  any  such  legaoy  shall  be  payable  out  of  real  property  the  heir  or  devisee  shall 
deduct  soeh  tax  therefrom  and  pay  the  same  to  the  executor,  administrator  or 
trustee  and  the  tax  shall  remain  alien  or  diarge  on  such  real  estate  u^ktll  sud  tax  is 
paid,  and  the  payment  thereof  shall  be  enforced  by  the  executor,  administrator 
or  trustee  in  the  same  manner  that  payment  of  the  legacy  might  be  enforced.  If 
any  such  legacy  shall  be  given  in  money  to  any  person  for  a  limited  period  the 
executor,  administrator  or  trustee  shall  retain  the  tax  upon  the  whole  amount,  but 
if  not  in  money  he  shall  make  appUcation  to  the  Board  of  Tax  CommiHsioners  to 
make  an  apportiODment,  if  the  ease  require  it,  of  the  sum  to  be  paid  into  his  hand 
by  sodi  legatees,  aiid  for  aiMhlMier  Older  r^tiveth^ 

Legatees,  distributees,  or  other  donees  shall  be  personally  liable  for  the  taxes 

imposed  by  Section  5  of  this  act  until  the  same  are  paid  over  by  them  to  the 
executor,  administrator,  or  trustee;  Provided,  however,  that  if  the  will  or  other  in- 
strument directs  the  payment  of  such  taxes  from  the  residue  or  as  an  expense  of 
administration,  the  sud  liability  shall  continue  until  the  said  taxes  are  received 
the  general  treasurer  or  bmid  is  filed  as  provided  in  Section  11  of  this  act. 

Tmuitn  ef  no»-tf  iMf  nt  dccedeats. 

Sec.  19.  In  the  case  of  real  property  located  in  Rhode  Island,  belonging  to  the 
estate  of  a  non-resident  decedent,  the  tax  shall  be  assessed  upon  the  full  and  fair 
cash  value  of  said  property,  as  determined  by  the  Board  of  Tax  Commissioners, 
remaining  after  deducting  such  proportion  of  the  indebtedness  of  the  entire 
estate  of  said  non-resident  decedent  as  the  VBhie  of  said  real  property  and  any 
tangible  personal  property  located  within  Rhode  Island  bears'to  the  value  of 
the  entire  estate :  Provided,  that  only  the  excess  of  such  proportion  of  indebted- 
ness over  and  above  the  value  of  said  tangible  personal  property  shall  be  deducted 
from  the  appraised  value  of  said  real  property;  and  provided  further,  that  the 
executor,  administrator  or  trustee  of  such  non-resident  decedent's  estate  files 
with  the  Board  <d  Tax  Commissioners  duly  certified  statements  exhibiting  the 
full  and  fair  cash  value  of  the  entire  estate  and  the  indebtedness  for  whieh  said 
estate  has  been  adjudged  liable.  If  said  statements  are  not  filed  as  herein 
provided,  only  such  debts  and  expenses  as  are  chargeable  to  the  said  real  property 
under  the  laws  of  this  State  shall  be  deducted. 

Setttement  of  tax  by  agreement 

Sbc.  20.  The  Board  of  Tax  Commisffloners,  with  the  approval  of  the  attorney- 
general,  may  effect  such  settlement  of  the  amount  of  any  taxes  imposed  by  this 
act  as  they  shall  deem  to  be  for  the  best  interests  of  the  State,  and  the  payment  of 


38 


BEPORT  OF  BOABD  OF  TAX  COIOHSSIONISBS. 


^trr  "  •<f«»  -rtWi«^on  of  such  tax.   The  agree- 

ment   the  executor,  «launi8t»tor,  or  trustee  to  such  settlement  shaU  be  binlg 

r°rw  ^  """^'^^  *°  »      fraud,  „r^ 

m^rfeet  error  of  such  executor,  administrator,  or  trustee:  Howmr.  that 

settlement  a.  to  any  tax  upon  gifts  or  transfers  of  real  eette  when,  ™>  convey- 
ance as  made  by  such  executor,  administwtor,  or  truetee,  diiUI  be  effeefad  JL 
the^^or  persons  receiving  the  real  eetrte,  or  mte«»t  therein,  which  is  subject 

Suvension  of  tax.  when. 

Jho.  21.  Whenever  it  shaU  be  necessary  in  the  settlement  of  any  ertate  to 
«t»n  property  or  funds  for  the  purpose  of  paying  the  claim  of  «.y  creditor,  the 

of  the  whole  or  a  proportionate  part  of  the  t«t  may  be  «»pended.  by  and  wUh  the 
^ val  of  the  Bo«*  of  T«c  Commi««.„^  to  aw«t  theX<^tion  of  such 

"^ioie  oi  appiaisaL 

Sw.  22.  Every  net  estate,  inheritance,  devise,  bequest,  legacy  or  gift  upon 
wluch  a  ta^^  imposed  under  this  act  shaU  be  apprised  at  it.  full  andTair  «»h 
vah,e  .mmedaatdy  upon  the  deMh  of  the  deced„ 

l^t^*^'  »^  "«*  J-keritance.  devise,  bequest 

^or  grft  Aatt  be  of  such  a  nature  that  its  full  and  fair  cash  value  cJot  b; 

P«wer  of  execator  to  sell. 

Sec.  23.  Every  executor,  administrator  or  trustee  shaU  have  full  power  to 

^mt^K  r       *"  by  this  act  in  the  same  manner  as  he 

«|Jit^be  enbtled  by  Uw  to  do  for  the  payment  of  the  debts  of  the  testator  or 

Inventory  aod  aw«tol  Hed  wMh  Bo«d  of  Commteteners. 

«.d  mtang.ble,  of  every  decedent  shaU  be  filed  with  the  Board  of  tTcZL- 
sioners  by  the  executor,  administrator  or  trurtee  within  three  months  after  hi- 
a^^mtment.   If  he  neglect,  or  refuse,  to  file        inventory  and  appraisal,  he 
^bel»bletoap.n.ltyofnotmo,,than«,000,whichshau 
BoMd  of  T«c  Comm^Hmers  for  the  use  of  the  State  upon  petition  to  the  Superior 


BBfOST  OF  BOARD  OF  TAX  COMMISSIONEBS 


39 


Court,  and  shall  also  be  subject  to  removal  as  such  executor,  administrator  or 
trustee  by  tlie  probate  court  or  other  court  of  competoit  jurisdiction  on  motion 
made  in  mich  court  by  said  Board  of  Tax  Ck>mmifl8ionera. 

Informatkm  furnished  Board  of  Tax  Commiiwioners  by  probate  clerk. 

Sbc.  26.  Every  probate  clerk  shaU,  within  thirty  days  after  the  granting  of 
letters  testamentary  or  letters  of  administration  upon  any  estate,  notify  the  Board 
of  Tax  Commissioners  of  the  name  of  the  decedent,  the  name  and  address  of  the 
executor,  administrator  or  trustee  appointed,  the  amount  of  the  bond  required  by 
the  court,  a  certified  copy  of  the  will  and  testament  of  the  decedent,  a  certified 
<opy  of  the  petition  for  administration  of  every  estate,  and  any  other  inf cnrmatioii 
which  he  may  have  oonooning  the  estate  such  decedent;  and  diall  also  furnish 
forthwith  such  further  informati<m  from  the  records  and  files  of  his  office  as  the 
Board  of  Tax  Commissioners  may  from  time  to  time  require. 

Ppwcti    BoMfd  qf  TmK  ConiBriiwk>iiq»— reappratoaL 

Sec.  26.  If  such  inventory  and  appraisal  filed  in  accordance  with  the  provis- 
ions of  Section  21  of  this  act  be  considered  by  the  Board  of  Tax  Gommi88i<mera 
to  be  an  insufficient  or  incomplete  statement  of  the  pn^ierty,  real,  tangible  and 
intangible,  of  the  decedent,  the  said  Board  of  Tax  Comminionen  shall  within 
thirty  dajrs  after  the  fifing  of  said  inventory  and  appraisal  give  notice  to  the 
executor,  administrator  or  trustee  to  appear  before  them  for  the  purpose  of 
examination  of  and  concerning  such  inventory  and  appraisal,  and  of  and  concern- 
ing all  matters  appertaining  to  the  estate  and  the  value  thereof  of  such  decedent; 
and  if  the  executor,  administrator  or  trustee  fails  to  appear  before  said  board  after 
due  notice,  or  if  after  appearance  and  examination  of  such  executor,  administrator 
or  trustee  said  board  still  ocmsiderB  such  inventory  and  appraisal  tobeaninsuffi- 
oient  and  incomplete  statement,  or  if  such  executor,  administrator,  or  trustee 
refuses  or  neglects  to  answer  the  questions  propounded  by  said  board  in  reference 
to  such  inventory  and  appraisal  of  such  estate,  the  said  Board  of  Tax  Commis- 
sioners may  appraise  or  appoint  a^person  or  persons  to  act  as  appraiser  or  ap- 
praisers. Such  appraiser,  being  first  sworn,  or  said  board,  shall  forthwith  give 
notioeby  mail  to  theexMnto,  administrator  or  trustee  and  to  all  persons  known 
to  haveaelaimcHrintereBtinthepriqpertytobeappraised^of  theti^ 
•the  appraisal  of  sudi  property,  and  shall  at  such  time  and  plaoe'appraise  the  same 
at  its  full  and  fair  cash  value  as  herein  prescribed;  and  for  that  purpose  said  board 
or  said  appraiser  is  authorized  to  issue  subpoenas  and  to  compel  the  attendance 
of  witnesses  and  to  take  the  evidence  of  such  witnesses,  under  oath  if  necessary, 
oonoeming  such  property  and  the  value  thereof,  such  witnesses  to  receive  the  saow 
fees  as  those  nam  paid  to  witnesses  subpoensd  to  attend  the  Superior  Court. 


40 


BBPOBT  OF  BOABD  OF  TAX  C0MMISSI0NEB8. 


Sud.  .ppra«r  AM  make  report  thereof  and  of  such  value  in  writing,  together 
witti  a  deposition  of  witnesses  examined,  if  any  such  examination  is  reduced  to 
wntmg,  to  said  Board  of  Tax  Commissioners  and  such  other  faets  m  relation 
thereto  and  to  said  matter  as  said  board  may  order  or  r^.  Such  appraiser 
shaU  receive  from  said  board  a  reasonable  compensation  for  services  «.d  actua( 
and  necessi^  traveling  e^^enses,  payment  thereof  to  be  made  out  of  the  money 
appropnated  for  the  expensee  of  the  Boad  of  Tax  Commissioners.   From  such 
"port  of  appraisal  and  other  proof  relating  to  such  estate  before  said  Boa«l  of 
Tax  Commissioners,  said  board  shall  determine  the  value  of  the  property  upo» 
which  all  taxes  imposed  by  this  act  are  computed  and  the  amount  of  taxes  to 
which  the  same  is  liable;  and  if  no  appraiser  be  appoiated  by  said  boaxd  «i  he«^ 
mbefore  provided  the  said  board  shaU  determine  the  vah»  of  the  property  upon 
which  aU  sa«i  taxes  are  computed  aodthe  amount  of  taxes  to  which  the  same  is 
nable. 

Appeal  from  assessment. 

Sec.  27  An  executor,  administrator,  trustee,  legatee  or  other  p^n 
»«p.eved  by  the  determination  of  the  Board  of  Tax  CommisBonew  may, 
withm  three  months  after  the  payment  of  any  tax  to  the  general  t»a«m„.  an4 
provided  such  tax  has  been  paid  under  protest,  apply  to  the  Superior  Court  « 
and  for  the  county  of  Providence  by  a  petition  in  equity  against  the  Board  of 
Tax  Comm«H»e,8  for  the  abatement  of  .Od  tax  or  any  part  thereof;  and  if 

Jl'TlT^  "^r^  ^'^  "Bessed, 

I*  «M  wdw  ui  abatement  of  such  tax  or  such  portion  thereof  as  was  assesswl 
without  authority  of  law,  and  such  order  shall  be  subject  to  appeal  in  the 
same  manner  as  other  equity  causes.  Upon  a  final  decision  ordering  an  abate- 
ment of  said  tax  or  any  portion  thereof  the  genenJ  treaaner  shaU  pay  the  amount 
adjudged  to  have  been  illegaUy  assessed,  with  interest  at  the  rate  of  six  per  centum 
^r«mum.  without  «,y  further  act  or  resolution  making  any  appropriation 

Iraaitm  tt  secwWes— HaHlity. 

8«c.  28.  No  banking  association  organised  under  the  Uws  <rf  the  United 
States  and  located  within  this  State,  no  corponrtion  incaqKntod  withm  this 
State,  and  no  unincorporated  association  or  joint  stock  company  or  buriness  trust, 
havmg  certificates  representing  share,  of  stock  and  canying  on  business  in  this 
State,  shaU  record  a  transfer  of  it,  stock  made  by  any  executor,  administrator,  or 
twste^  crisBue  a  new  certificate  for  any  such  share  of  its  stock  at  the  instance  of 
any  executor,  administrator,  or  trustee-,  or  transfer  any  registered  bond  or  otlMr 
registered  evidence  of  indebtedness  at  the  instance  of  any  executor,  administrator. 


BEFOBT  OF  BOABD  OF  TAX  COlOaSSIOlOlBS. 

or  trustee,  until  a  certificate  authorising  such  transfer  has  been  issued  by  the  Board 
of  Tax  Commissionen,  and  filed  with  the  said  corporation,  association,  company 
or  trust.  Any  such  corporation,  association,  company  or  trust  making  such  a 
transfer  without  first  obtaining  the  consent  of  the  Board  of  Tax  Commissioners 
shall  be  liable  for  the  amount  of  any  tax  wliich  may  be  assessed  on  account  of  the 
bequest  or  gift  of  such  stock,  bond  or  other  evidence  of  iiiilfililiNlimw,  together 
with  the  interest  thcterai,  in  an  action  to  be  t»ou|^t  in  the  name  <rf  die  general 
treaaoier.  The  Board  of  Tax  Commissioiiers  shall  not  issue  such  a  certificate 
until  aD  taxes  imposed  on  account  of  such  bequest  or  gift  has  been  paid,  or  the 
payment  thereof  secured  by  bond  or  deposit  as  hereinafter  provided. 

Trust  agreements  not  in  contenqdation  of  death. 

Sbc.  29.  WheDever  any  person,  during  his  life,  shall  appoint  a  trustee, 
naming  himself  or  others  as  beneficiaries,  and  providing  for  the  administration 
of  said  trust  after  his  death,  or  providing  for  a  termination  of  said  trust  and  a 
distribution  thereof  at  his  death,  a  transfer  taxable  under  the  provisions  of  this  act 
shall  be  deemed  to  take  place  upon  the  death  of  the  creator  of  said  trust,  and  all 
persons  or  corporations  acting  as  such  trustee  or  trustees  shall  upon  said  death 
file  with  the  Board  of  Tax  Commissioners  a  full  aooount,  showing  the  trust 
agreement,  if  any,  the  amount  of  the  trust  property,  the  eztrat  of  the  duration 
of  said  trust,  the  manner  provided  for  its  termination,  the  name  or  names  of  the 
beneficiaries,  and  any  other  information  relating  thereto  which  said  Board  of 
Tax  Commissioners  may  deem  necessary  for  the  proper  assessment  of  the  tax 
thereon ;  and  any  such  trustee  or  trustees  neglecting  or  refusing  to  file  such  account 
shall  be  liable  to  a  penalty  of  $1,000,  which  shall  be  recovered  by  the  Board  of 
Tax  Commissioners  for  the  use  of  the  State  upon  petition  to  tiie  Supmor  Court. 

Oafans  of  crediton  taxod  in  certain  cases. 

Sec.  30.  The  amoimt  due  upon  the  claim  of  any  creditor  against  the  estate  of 
a  decedent  arismg  under  a  contract  made  after  the  passage  of  this  act,  if  payable 
by  the  terms  of  such  contract  at  or  after  the  death  of  the  deceased,  shall  be 
subject  to  the  same  tax  imposed  by  Section  5  of  this  act  iqxm  a  legacy  of  like 
amount.  The  value  <rf  net  estates  of  decedents  or  the  value  of  legacies  or  dis- 
tributive shares  in  the  estates  of  decedents,  for  the  purposes  of  taxation  under  the 
provisions  of  Section  1  and  Section  5  of  this  act,  shall  not  be  diminished  by  reason 
of  any  claim  against  the  estate  based  upon  such  a  contract,  except  in  so  far  as  it 
may  be  shown  affirmatively  by  competent  evidence  that  such  claim  was  legally 
due  and  pnyable  in  Uie  Ule  time  of  the  decedent. 


42 


KEPORT  OF  BOABD  OF  TAX  COMMIS8IONXB8. 


Final  account  allowed,  when. 

Stc.  31.  No  final  account  of  any  executor,  administrator,  or  trustee  shaU  be 
allowed  by  the  court  having  jurisdiction  thereof  unless  such  acoount  shows,  and 
the  judge  of  the  court  finds,  that  all  taxes  imposed  under  the  provisions  of  this 
act  upon  any  property  or  interest  therein  belonging  to  the  estate  to  be  setOed 
by  said  account  and  th^  payable  have  been  paid  or  that  the  payment  of  said 
taxes  have  bem  secured  by  bond  or  deposit  as  hereinbefore  provided.  The  certifi- 
cate of  the  Board  of  Tax  Commissioners  of  the  amount  of  said  tax,  and  the  receipt 
of  the  general  treasurer  for  the  amount  of  tax  so  certified,  shaU  be  ccmdusive  as 
to  the  payment  of  the  tax  to  the  extent  of  said  certification. 

Transfers  taxed  at  highest  rate,  when. 

Snc.  32.  Whenever  any  executor,  admmistrator,  trustee  or  other  person 
hable  for  any  tax  imposed  under  the  provisions  of  this  act,  refuses  or  neglects  to 
furnish  the  Board  pf  Tax  Commissioners  with  any  information  which  in  the 
opuuon  of  said  Board  is  necessary  for  the  proper  computation  of  the  taxes  payable 
hereunder,  after  having  been  requested  so  to  do,  said  Board  of  Tax  CJommissioners 

ShaU  certify  such  taxes  at  the  highest  rate  at  which  thi^  could  in  any  event  be 
computed. 

Intestate  estates. 

Sbc.  33.  If  upon  the  decease  of  a  person  leaving  an  estate  hable  to  a  tax  under 
the  provisions  of  this  act,  a  will  disposing  of  such  estate  is  not  offered  for  probate 
or  an  application  for  administration  is  not  made  within  three  months  after  such 
decease,  the  probate  court  upon  apphcation  by  the  Board  of  Tax  Comnussioners 
shall  ^pomt  an  administrator  thereof. 

Double  application  of  certain  •^Tttenit. 

Sk.  34.   Sections  21,  22,  23,  24,  26,  28,  27,  28,  30,  31,  32  and  33  shall  apply 
to  taxes  miposed  under  the  provisions  of  both  Section  1  and  Section  5  of  this  act. 
Sec.  34.   This  act  shall  take  effect  April  1,  1916. 


Franchise  and  Miniiiiimi  Tax  on  Domcstte  Cw^ 

In  changing  the  laws  r^ulating  taxation,  where  an  mcrease  in 
revenue  is  the  object,  due  consideration  should  be  given  to  the  equit- 
able distribution  of  the  new  burden,  and  great  care  should  be  exercised 
lest  existing  inequahties  be  retained  or  increased. 


BEPORT  OF  BOARD  OF  TAX  COMMISSlONEiiS. 


43 


Property  or  privilege  which  has  not  contributed  at  all,  or  has  not 
contributed  its  share  to  the  public  funds,  should  first  be  required 
to  contribute  on  a  parity  with  that  taxed  before  additional  burdens 
are  placed  on  that  akeady  paying  its  full  share.  In  this  connection 
your  attention  is  respectfully  directed  to  pages  16  to  18  and  24  to 
29  inclusive  of  the  report  of  this  Board  made  to  your  Excellency  on 
January  15,  1915. 

The  condition  precedent  to  Uability  to  the  corporate  excess  tax 
is  the  transaction  of  business  for  profit  within  the  state,  and  many 
domestic  corporations  are  therefore  not  Uable  to  the  tax.  It  appears 
to  the  Board  that  it  is  entirely  proper  that  such  corporations  should 
not  be  liable  to  this  tax,  but  it  also  appears  that  all  domestic  corpora- 
tions not  liable  to,  or  not  paying  a  corresponding  amount  under,  the 
present  corporation  tax,  should  pay  a  moderate  franchise  or  minimiim 
tax  for  the  privileges  enjoyed  under  our  laws.  The  imposition  of 
such  a  tax  is  therefore  recommended  because  while  increasing  the 
revenues  somewhat  it  will  also  tend  to  equaUze  the  taxes  unposed 
on  corporations  by  the  State.  The  draft  of  a  law  designed  to 
accomplish  this  result  is  submitted  herewith: 

It  is  enacted  by  the  General  Assembly  as  follows:  ^ 

Section  1.  Chapter  769  of  the  Public  Laws,  passed  at  the  January  Session, 
A.  D.  1912,  referred  to  as  the  "Tax  Act  of  1912,"  is  hereby  amended  by  adding 
the  following  section: 

"Sec.  49.  Every  corporation,  jomt  stock  company  or  association  incor- 
porated in  this  State,  all  hereinafter  referred  to  in  this  section  under  the  term 
'corporation'  which  pays  no  tax  to  the  State  or  a  tax  less  than  two  and  fifty 
one-hundredths  dollars  on  each  ten  thousand  dollars  or  fractional  part  thereof 
of  its  authorized  capital,  eBsept  religious,  charitable  and  literary  corporations, 
and  ezoq>t  corporations  the  property  of  which  is  operated  in  this  State  by  any 
oorporatioii  paying  a  tax  upon  gross  earmngs  as  provided  in  Section  25  of  this  act , 
shaU  pay  an  annual  franchise  tax  to  the  State  upon  its  authorized  capital  stock 
which  when  added  to  any  tax  paid  by  it  in  the  same  year  to  the  State  on  its 
corporate  excess  shall  equal  two  and  fifty  one-hundredths  dollars  for  each  ten 
thousand  dollars  or  fractional  part  thereof  of  such  authorised  capital:  Pronded, 
however,  that  such  tax  shall  not  be  assessed  agamst  any  such  corporation  in  the 
year  in  which  such  corpwation  is  i&ooEporated. 
U 


44 


KEPOBT  OF  BOARD  OP  TAX  COMMISSIONERS. 


"Every  such  ccnporation  which  transacts  no  business  for  profit  in  this  State 
shall,  on  or  before  the  first  day  of  March  in  each  year,  return  as  of  the  thirty-first 
day  of  December  next  preceding  to  the  Board  of  Tax  Commissioners,  under  oath 
of  its  treasurer,  or  of  a  duly  authorized  agent  or  officer  of  such  corporation,  if 
organized,  and  if  not  organized,  under  oath  of  someone  authorised  to  act  by  the 
incorporators: 

"(1)   The  name  of  the  coiporatira^  and  the  location  (rf  its  principal  office. 
"(2)    The  amount  of  its  capital  authorized,  and  the  amount  outstanding,  the 
par  value  of  its  capital  stock,  and  if  there  are  different  classes  of  stock,  the  amount 
authorized  and  the  amount  outstanding  of  each  class. 

"The  Board  of  Tax  Commissioners,  on  the  first  business  day  of  June  in  each 
year,  shall  make  up  a  list  <tf  all  ixwpmations  subject  to  a  tax  upon  their  franchises 
as  aforesaid,  and  shaU  assess  a  tax  upon  each  such  corporation  at  such  rate  as 
win  when  added  to  any  tax  which  such  corporation  pays  or  is  liable  to  pay  to 
the  State  in  the  same  year  equal  two  and  fifty  one-hundredths  dollars  for  eacdi  ten 
thousand  doUars  or  fractional  part  thereof  of  its  authorised  capital.  And  the 
said  board  shall  mter  the  amount  of  the  tax  aswssed  against  ea^ 
tion,  and  shall  certify  to  the  correctness  <rf  sudi  list  and  deUver  a  duly  attested 
eopy  theroof  as  a  puMie  record  to  the  general  treasurer,  who  shall  receive  and 
odlect  the  taxes  so  assessed,  in  the  same  manner  and  with  the  same  powers  as  are 
provided  in  sub-section  (5)  of  Section  11  of  this  act.   Said  board  shaU  also 
forthwith  mail  a  notice  of  the  amount  of  its  tax  to  each  such  ooipot»tk>n,  but 
failure  to  receive  said  notice  shaU  not  excuse  the  noiH»ymait  of  the  tax. 

"The  tax  aflseased  as  af(»esaid  shaH  be  payable  cm  the  first  day  of  July  next 
after  its  assessm^t  as  aforesaid,  and  if  not  paid  by  the  fifteenth  day  of  such  July, 
diaH  bear  interest  from  the  first  day  of  such  July  at  the  rate  of  eight  per  centum' 
per  annum  until  paid.  The  general  treasurer  shaU,  on  the  fifteenth  day  of  July 
in  each  year,  make  a  list  of  aU  corporations  delinquent  in  the  payment  of  their 
taxes  due  and  payable  on  the  first  of  July  of  each  year  at  years  preceding  under 
this  section,  and  shaU  certify  to  the  correctness  of  such  list,  and  deKver  the  same 
forthwith  to  the  Board  of  Tax  Commissionov. 

"FaUure  by  any  such  corporation  to  make  the  returns  or  to  pay  the  franchise 
tax  provided  in  this  section  for  a  period  of  three  years  after  the  first  day  of  July 
of  the  year  in  which  any  such  payment  was  due  and  payaUe,  shall  oonstttate  a 
ground  for  the  forfeiture  by  such  ooiporatioii  of  its  charter  at  law.  In  case  of  the 
failure  on  the  part  of  any  such  ocnporation  to  make  the  return  or  the  payments 
as  aforesaid  within  the  time  specified  in  this  section,  the  Board  of  Tax  Commis- 
sioneiB  shall,  on  car  before  the  first  day  of  October  in  each  year,  report  suchiaUure 
to  the  attom^^enU,  together  with  the  name  or  names  of  every  such  dehnquent 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS.  45 

corporation,  and  the  attorney-general  shall  forthwith  file  his  petition  in  the  superior 
court  for  the  county  in  which  such  corporation  is  located,  praying  for  the  dissolu- 
tion of  such  corporation,  and  the  superior  court  may  in  the  manner  prescribed  in 
Section  27  to  Section  30  inclusive  of  Chapter  213  of  the  General  Laws,  and  amend- 
ments thereof,  decree  such  dissolution  and  have  and  exercise  the  powers  and 
jurisdiction  conferred  upon  it  in  and  by  said  sections  of  Chapter  213  and  amend- 
m^ts  thereof.'' 

Sbo.  2.  This  act  shall  take  effect  upon  its  passage,  and  all  acts  and  parts  of 
acts  inoottsistoiit  herewith  are  hareby  repealed. 


Savings  Deposits  in  National  Banlcs. 

Our  present  statute  (Gen.  Laws,  Chap.  39,  Sec.  3-4)  requires  the 

payment  of  a  tax  of  $4  per  $1,000  on  savings  and  participation 
accounts  in  state  banks  and  trust  companies,  a  similar  tax  is 
imposed  upon  the  savings  accounts  and  profits  of  savings  banks, 
the  individual  depositors  are  exempt  from  taxation  on  these 
accounts  and  the  tax  is  paid  by  the  banks  durect  to  the  General 
Treasurer.  Similar  accounts  in  national  banks  are  not  taxed  by 
the  state,  but  the  depositors  are  liable  to  local  taxation  thereon. 
While  these  deposits  are  legally  taxable  in  the  local  jurisdiction  in 
which  their  owner  resides,  the  practical  operation  of  this  provision 
of  our  tax  law  results  in  the  escape  from  taxation  of  substantially 
the  entire  amount  of  these  deposits.  Aside  from  any  necessity  for 
revenue  thelse  deposits  should  be,  in  the  interest  of  justice,  subjected 
to  the  same  tax  and  as  positive  methods  of  collection  as  are  applied 
to  similar  deposits  in  other  banks. 

Savings  deposits  in  national  banks  are  successfully  taxed  in  Ver- 
mont and  Connecticut.  This  method  of  taxing  savings  deposits  in 
national  banks  originating  in  Vermont  has  been  sustained  by  the 
courts  of  that  state  and  by  the  United  States  Supreme  Court.  The 
Connecticut  law,  modeled  after  that  of  Vermont  and  passed  at  the 
last  session  of  the  legislature,  has  been  accepted  by  the  national 
lianks  of  that  state  without  exception. 


40 


BBPORT  OF  BOABD  OF  TAX  COMMISSIONBBS. 


The  amount  of  savings  deposits  in  the  national  banks  of  this  stote 
IS  substantial  and  at  the  rate  applied  to  similar  deposits  in  other 
banks  should  yield  a  revenue  of  several  thousand  dollars. 

The  Board  recommends  the  taxation  of  savings  and  participation 
accounla  m  national  banks  as  a  necessary  step  towards  the  equalisa- 
tion of  the  tax.on  a  class  of  property  wWch  furnishes  approximately 
one-fifth  of  the  present  state  revenue.  The  draft  of  a  law  designed 
to  accomplish  this  result  is  submitted  herewith : 

U  U  enacted  by  the  General  AsaenMy  at  f Mam: 

Section  1.  Every  peddent  of  this  State  having,  on  the  last  business  dav  of 
June,  an  mterest  bearing  deposit  in  a  national  bank  in  this  Stote  shaU,  within 
twenty  days  thereafter,  except  as  otherwise  provided  in  this  act,  annuaUy  wport 

K  """""^  and  the  name  and  location  of  such 

bank  to  the  Board  of  Tax  Commi«uonei8  on  bknks  to  be  prep^ed  «.d  funushed 
by  said  Board  to  such  d^xtsitor  upon  aiq>Iication  therefor. 

a»c.  2.  Such  reports  shaU  be  kept  on  file  by  said  Board  of  Tax  Conuniaaionere 
for  three  years  from  and  after  the  dates  on  which  the  taxes  based  thoeon  become 
due  and  payable  to  the  State.  Such  reports  shaU  not  be  subject  to  the  inspec- 
tion of  any  person  other  than  the  members  of  the  said  Board  of  Tax  Commi». 
sioners  and  the  employees  in  their  office  and  the  attorney-general.  Any  infor- 
matK«  contamed  in  such  reporte  shafl  not  be  disclosed  by  any  person  authorized 
to  examme  the  same,  except  by  the  direction  of  a  court  of  competent  jurisdiction. 

a*;.  3.  Every  person  so  having  a  deposit  in  a  national  bank  as  aforesaid 
shall  annually,  except  as  otherwise  provided  in  this  act.  pi^r  a  tax  to  the 
State  which  ,s  hereby  assessed  at  the  rate  of  fourwtenths  of  one  per  cent,  amiually 
upon  the  amount  of  such  deposit  so  heW  by  such  natkmal  bank  on  thelast  business 
^y  of  June;  and  no  deductfen  therefrom  shaU  be  made  on  account  of  any  exemp- 
«»n.   Notice  of  the  «m«int  of  said  tex  and  the  amoUnt  of  the  deposit  on  which 
«udtox»Used  ShaU  bemailed  to  each  depositor  liable  to  such  tax,  except  as otherw 
wise  provided  in  this  act,  by  the  Board  of  Tax  Commissioners  on  the  first 
business  day  of  September,  and  failure  to  receive  «.ch  notice  d-dl  not  exc™« 
such  depositor  from  the  papnent  of  the  tox.  S«d  Board  shaU  also  forthwith 
certify  the  amount  of  said  tox  assessed  ag^nst  each  depodtor  and  the  amount  of 
the  d^t  on  which  said  tox  is  based  to  the  General  Treasurer.   The  taxes 
•mpoeed  by  thw  section  shall  be  paid  to  the  General  Treasurer  annually  for  the 
use  of  the  Stote  on  or  before  the  first  day  of  October  next  foUowing  the  dates 


BEPORT  OF  BOABD  OF  TAX  COMMISSIONBBS.  '  47 

whereon  the  reports  provided  for  in  the  first  section  of  this  act  are  required  to  be 
made.  ^ . 

Sec.  4.  No  other  tax  diali  be  assessed  on  such  deposits  in  national  banks  or 
against  the  depositors  on  acoount  thereof. 

Sec.  6.  A  depositor  who  willfully  fails  to  make  returns  or  to  pay  the  taxes 
provided  in  this  act  shall  forfeit  five  per  cent,  of  such  deposit  to  the  use  of  the 
State  for  each  month's  delay  in  filing  such  return  or  in  paying  such  tax.  Such  tax 
and  forfeitures  may  be  recovered  in  an  action  on  this  statute  commenced  by  the 
General  Ttk^amt  in  the  name  of  the  State  in  the  Superior  Court  hoiden  in  the 
County  of  Providenoe. 

Bbc.  6.  A  person  having  any  of  the  money,  chattels,  eflfects,  goods,  rights  or 
credits  of  said  depositor  in  his  possession  may  be  summoned  as  trustee  in  any 
action  instituted  under  the  preceding  section. 

Sec.  7.  If  the  Board  of  Tax  Commissioners  or  the  court  wherein  such  action 
is  pending  for  the  recovery  of  such  tax  or  forfeitures  becomes  satisfied  that  such 
faflurewas  not  willful  on  the  part  of  the  depositor,  said  Board  of  Tax 
Commissioners  or  said  court  may,  in  its  ^liscretion,  waive  any  part  or  all  of  such 
p^ialty. 

Sec.  8.  If  a  national  bank  in  this  State  so  elects,  it  may  pay  to  the  State  all 
taxes  provided  in  this  act;  and  it  shall  be  lawful  for  such  bank  to  deduct  such 
taxes  so  paid  from  the  interest  or  deposits  then  or  thereafter  held  by  it  belonging 
to  the  person  from  whom  such  tax  becomes  due. 

Sec.  9.  If  a  national  bank  makes  the  election  provided  in  the  preceding 
section,  it  diall  file  with  the  Board  of  Tax  Commissioners  a  stipulation  getting 
forth  such  fact.  If  such  stipulation  is  filed  on  or  b^ore  the  last  business  day 
of  June  in  any  year,  it  shall  take  effect  on  said  last  named  date  and  shall  remain 
in  full  force  and  effect  until  it  shall  thereafter  be  revoked  as  hereinafter 
provided.  No  depositor  in  such  bank  shall  be  required  to  pay  the  tax  or  make 
the  returns  hereinbefore  specified,  covering  any  annual  period  for  which  such 
stipulation  shaU  remain  in  force.  A  national  bank  filing  sueh  stipulation  may 
tiiereafter  revoke  it  by  returning  to  the  Board  of  Tax  CommissionerB  for  can- 
edlation  the  duplicate  certificates  issued  by  said  board  to  said  bank  under  Section 
10  of  this  act,  the  revocation  to  take  effect  on  the  last  day  of  the  annual  period 
within  which  such  certificates  are  returned  for  cancellation  as  aforesaid.  When 
such  certificates  are  cancelled  as  aforesaid,  said  bank  shall  not  thereafter  be  liable 
to  make  the  pajrments  provided  in  said  stipulati^  ensept  for  the  annual  period 
in  which  such  cancellation  is  made. 

Sec.  10.  Upcm  8U<di  stipulation  being  filed,  said  Board  of  Tax  Conmiissioners 
shall  issue  in  duplicate  to  the  bank  filing  the  same  a  certificate  showing  that  it  has 
filed  the  aforesaid  stipulation. 


48 


BBPOBT  OF  BOABD  OF  TAX  C01IMI88IONERS. 


&c  11  Ev«y  natkmal  buk  filing  such  stipulation  shall  thereupon  become 
U»We  to  the  State  to  make  returns  and  pay  four-tenths  of  one  per  cent,  of  the 
average  wnount  of  such  deposits  held  by  such  bank  during  each  twelve  months' 
penod  beginning  with  the  last  business  day  of  June  in  which  «ieh  rtipulatSon 

remains  in  force. 

Stc.  12.  If  audi  bank  files  a  stipulation  as  hereinbefore  provided  it  shall 
on  or  before  the  fifteenth  day  of  July,  file  with  the  General  Treasurer  and  the  Board 
of  Tax  Commissioners  a  return  verified  by  the  oath  of  its  president,  cashier 
or  one  of  its  directors,  showing  the  average  amount  of  such  depotits  for  the  twdye 
months  ending  on  the  last  business  day  of  the  preceding  June,  and  shaU  for  each 
annual  period  pay  to  the  General  Trmmm^t,  on  or  before  the  first  Monday  in 
August  m  each  year,  fouMenths  of  one  per  cent,  of  such  average  amount.  The 
General  Treasurer  d»U  receive  and  collect  the  taxes  assessed  hereunder.', 

aic.  13.   Whenever  in  the  opinion  of  said  Board  of  Tax  Commiseionen  it 
be  for  the  best  interests  of  the  State  so  to  do,  they  may  publish  a  notice  in 
such  newspaper  or  newspapers  as  they  shaU  designee,  setting  fartii  tiiat  flie  bank 
or  banks  th^ein  named  have  filed  or  fafled  to  file  a  stipuUtion,  or  hive  elected  to 

revokeoneaUeadyfiled;andmayinlikem«mernotifyalldepodtors  having  interest 
deposits  therein  taxable  under  this  act  to  file  the  proper  returns  as  pro- 
vided m  the  first  section  of  this  act  and  pay  the  tax  assessed  against  such 
dqxwitors  mease  such  bank  or  banks  shall  fail  to  file  a  stipulation  or  Sect  to 
revoke  one  already  filed;  or  that  such  depositors  are  absolved  from  making  such 
returns  and  paying  such  tax  in  case  tile  bank  shall  file  a  stqNilation  or  etect  to 
contmue  one  theretofore  filed. 

Sec.  14.  The  provisions  of  tiii,  act  shall  apply  to  every  person  having  an 
mtaest  bearing  deposit  in  a  national  bank  in  this  State  on  participation  or  in  tiie 
same  manner  as  in  savings  banks. 

Sec.  15.    The  provisions  of  tius  act  shaU  not  apply  to  any  pr<^y  in  tiUs 
State  exempt  by  law  from  local  ti«ation;  nor  to  savings  banks,  trust  companies 
and  savings  banks  and  trust  companies  which  have  mterest  bearing  deposit^ 
ui  national  banks;  nor  to  interest  bearing  deposits  of  national  banks  in  anotiier 
national  bank. 

Sec.  16.   Nothmg  in  this  act  shaU  be  oanstrued  bb  exempting  from  taxatkm 
any  deposit  in  any  national  bank,  exo^t  as  bereinbefoie -provided. 
Bmc.  17.   This  act  duOl  take  effect  from  and  after  its  passage. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS.  ^  '  ,^  49 

The  Direct  State  Tax. 

The  direct  state  tax  furnishes  a  necessary  element  of  elasticity  in 
our  revenue  sycrt^.  It  presents  a  means  ready  at  hand  for  increasing 
or  decreasing  the  state  revenue  positively  and  quickly  with  results 
easily  determinable  within  narrow  limits.  It  also  possesses  the  further 
advantage,  which  should  not  be  overlooked,  of  operating  as  a  restrain- 
ing influence  upon  expenditures.  Each  municipality  will  have  to 
bear  some  part  of  the  burden,  if  it  is  found  necessary  to  increase  the 
rate,  and  each  would  likewise  be  rdieved  if  any  reduction  wbs  made. 

Under  present  conditions  an  increase  or  decrease  of  one  cent  in 
the  present  state  tax  rate  on  each  $100  of  locally  assessed  valuation 
would  increase  or  decrease  the  amount  paid  to  the  state  by  the 
several  cities  and  towns  by  approximately  $70,000.  An  increase  of 
three  cents  in  the  rate  would  thus  increase  the  state  revenue  approxi- 
mately $210,000  and  this  increase,  unless  local  rates  w&e  abnormally 
high,  would  not  cause  imdue  hardship.  The  difficulty  is  that  this 
increase  in  rate,  if  made,  would  not  be  equitably  applied  or  even 
i^pproximatdy  so. 

*The  law  requiring  the  assessment  of  all  property  for  taxation  at 
its  full  and  fair  cash  value  is  specific  and  clear.  It  is  a  well  recognized 
fact,  however,  ib&t  various  bases  of  valuation,  as  wdi  as  differ^t 
percentages  of  the  full  value,  are  employed  by  the  several  municipali- 
ties in  the  valuation  of  their  property  for  taxation.  The  departures 
fxom  a  strict  application  of  the  principle  of  full  valuation  for  purposes 
of  assessment  are  all  towards  a  valuation  less  than  100  per  cent., 
and  as  a  result  of  these  irregular  practices  we  have  valuations  in  some 
localities  as  low  as  35  or  40  per  cent,  of  full  value  and  in  others  as 
high  as  approximately  100  per  cent. 

The  practical  difficulty  in  obtaining  a  just  distribution  of  the 
tax  burden  even  in  local  assessment  where  anything  b^t  the  full 
value  is  used  as  a  base,  is  well  known,  and  the  practice  of  compensat- 
ing for  a  low  valuation  by  a  high  rate  is  generally  condemned. 
Furthermore,  undervaluations  are  muc^  more  inimical  to  justice 
with  regard  to  municipalities  and  the  state  than  between  taxpayers 


50 


BEPOBT  OF  BOAKD  OF  TAX  COMMISSIONEBS. 


in  the  same  jurisdicUon.    InequaUties  in  valuations  of  property 
witlun  the  same  municipality  may  be  corrected  by  various  means- 
there  is  at  least  some  remedy;  appeal  may  be  had  to  the  assessinx' 
authorities  and  if  that  faU,  rea.urse  may  be  had  to  the  couZ 
The  state  however  has  no  remedy  whatever  at  present  for  the  loss 
•  of  revenue  thus  sustained  or  for  the  shifting  of  the  burden  of  the 
state  tax.   As  the  municipaUties  attempting  to  comply  with  the  law 
relative  to  the  assisssment  of  property  have  no  remedy  for  the 
mequahty  of  burden  imposed  by  such  compliance,  they  are  impelled 
to  equal  or  outdo,  if  possible,  the  others  in  undervaluation  An 
mcr««e  in  the  direct  state  tax  rate  would  exaggerate  the  bad 
effects  of  these  inequalities,  and  would  also  tend  to  increase  the 
mjustace,  as  the  higher  the  rate  the  greater  the  advantage  to  be 
gamed  by  undervaluation. 

The  injustice  due  to  the  present  method,  or  rather  lack  of  metht>d 
IS  so  manifest  that  the  necessity  for  some  form  of  equalization  of 
local  valuations,  at  least  for  the  purpose  of  state  taxation,  is  apparent. 
I  It  18  intended  to  increase  the  direct  state  tax  rate,  equali»tion  seems 
almost  imperative. 

The  hme&mal  effects  of  equalizing  the  valuations  of  the  seveml 
municipalities  for  purposes  of  state  taxation  would  of  necessity  be 
gradual.   An  mcrease  in  the  total  valuation  of  the  state  would 
I«x>bably  be  innnediately  apparent,  but  the  full  effect  would  not  be 
attamed  until  such  time  as  a  large  amount  of  data  could  be  coUected 
and  prepared  for  practical  use.   To  make  a  systematic  equalization 
of  lomlvaluationsfor  the  whole  state  withmayear,  or  even  two  years 
would  be  an  undertaking  of  such  magnitude  that  the  expense  and  the 
unsetthng  of  local  conditions  involved  would  probably  outweigh  the 
immediate  benefits.   Agradualreadjustment  of  local  valuations  upon 
a  umform  basis  could  be  consummated  without  great  expense  or 
undue  disturbance  of  local  conditions,  and  would  result  in  a  more 
just  distribution  of  the  burden  of  state  taxation,  and  an  increase  in 
revenue  from  that  source  which  ultimately  would  be  substantial 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS.  51 

Piroposed  Method  for  Preparing  and  Tabulating  Fiscal  Information 
for  Use  of  Legislature. 

In  compliance  with  the  suggestion  contained  in  the  last  paragraph 
of  your  Excellency's  communication  of  September  29th,  1915,  the 
Board  has  compiled  and  tabulated  in  detail  the  expenditures  of  the 
several  departments  for  the  years  1913,  1914  and  1915;  the  total 
revenue  received  by  the  State  for  the  same  period;  the  estimated 
expenditures  for  1916;  and  the  estimated  receipts  and  the  several 
sources  from  which  the  receipts  are  expected  to  be  derived  for  1916. 

The  tables  are  arranged  with  the  idea  of  facilitating  comparison 
between  actual  departmental  expenditures,  both  in  total  and  in 
detail;  the  estimated  expenditures  for  1916  have  been  classified  in 
the  same  manner  as  the  expenditures  for  the  three  preceding  years, 
thus  showing  not  only  increases  and  decreases  in  totals,  but  also  the 
items  to  which  the  increases  or  decreases  are  properly  attributable. 

Certain  data  required  for  the  completion  of  the  tables  is  not  avail- 
able until  January  10th;  therefore  the  tables  cannot  be  submitted 
to  your  Excellency  until  such  time  after  that  date  as  is  required  for 
tabulation  and  printing. 

The  form  of  the  tables  and  the  system  of  classification  used  are 
such  that  this  method  of  providing  information  regarding  receipts 
and  disbursements  early  in  the  session  of  the  General  Assembly  may 
be  very  easily  carried  out  in  succeeding  years,  if  it  is  deemed  advisable. 
The  Board  has  endeavored  to  collect  and  tabulate  in  convenient 
form  for  reference  and  comparison,  for  use  early  in  January,  material 
which  is  usually  not  available  until  late  in  the  session,  if  at  all.  It 
is  hoped  that  the  members  of  the  legislature  may  be  saved  much  time 
and  annoyance,  as  well  as  labor,  and  the  work  of  the  finance  com- 
mittees of  the  two  houses  facilitated  by  the  use  of  this  material. 

Appreciation. 

The  Board  of  Tax  Commissioners  gratefully  acknowledges  the 
valuable  assistance  ruddered  by  state  tax  ofileials  generally  in  the 
preparation  of  the  proposed  inheritance  tax  law,  and  in  the  compila- 

12 


52 


BSPOBT  OF  BOARD  OF  TAX  COMIUSSIONSRS. 


tion  of  the  accompanying  tables  showing  the  classifications  of  heirs, 
rates  and  exemptions  under  the  laws  of  the  several  states.  The 
Board  also  desures  to  give  full  credit  to  the  reports  of  inheritance 
tax  authorities  of  other  states,  works  on  taxation,  and  other  publi- 
cations from  which  quotations  have  been  borrowed,  all  of  which 
have  been  of  great  assistance. 

The  Board  also  wishes  to  express  thanks  for  many  valuable  sugges- 
tions offered  by  practicing  attorneys  and  economists  both  withm  and 
without  the  State.  While  it  is  unpracticable  to  designate  by  name 
and  thank  individually  every  one  who  has  given  generously  of  his 
time  and  experience,  the  Board  feels  that  its  thanks  are  especially 
due  to  Professor  Charles  J.  Bullock  of  Harvard  University,  Professor 
Edwin  R.  A.  Seligman  of  Columbia  University,  and  Professor 
Henry  B.  Gardner  of  Brown  University  for  many  excellent  suggestions 
and  much  material  aid. 


BEPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 


53 


The  following  tables  are  intended  to  supply  a  brief  resume  of  the 
inheritance  tax  laws  of  the  several  states  and  territories  of  the 
United  States,  showing  classes,  rates  and  the  amoimt  of  exemptions. 

Exemptions  are  classed  as  conditional  and  unconditional.  Where 
an  amoimt  is  allowed  as  a  specific  exemption,  in  any  and  all  events 
it  is  designated  ''unconditional,"  to  distinguish  from  those  cases  in 
which  the  shares  of  a  decedent's  estate  are  not  taxed,  provided  the 
same  are  less  than  or  do  not  exceed  an  amount  certain — ^that  is, 
where  the  exemption  is  conditional. 

Where  the  words  ''rate  is  on  excess''  are  found  in  a  note  following 
the  table  of  any  state  or  territory,  the  rate  per  centum  given  in  any 
respective  division  applies  to  the  higher  or  intermediate  amounts  and 
not  to  the  lower.  The  preceding  rate,  if  any,  applies  to  the  lower 
amount. 


54 


REPOBT  OF  BOARD  OF  TAX  COMMISSIONEBS. 


INHERITANCE  TAXES. 

rstates  asterisked  (♦)  exempt  transfers  to  be  itted  for  one  or  mote  of  the  foUowing  or  Idadied 
mJ^fcSil  ]  benevolent,  religious,  educational.  Uterary.  seientifie.  eUte.  county 


ALABAMA. 


IUtm  and  Exemptioxs. 


Had  collateral  inheiitante  tax 

S,m^l84Ti8«Bf'''**^  only  Constitution  adopted  1901  aUows  for  collateral  to  2U%.  but  has 
irom  1848-1868.  |       never  been  made  effective  by  statute.      "»  /«»  «»■ 


ARIZONA. 


Grandfather,  grandmother, 
father,  mother,  husband, 
wife,  child,  brother,  sister, 
son-in-law  or  daughter-in- 
law.  adopted  or  aeknowl- 
edced  child  

1%  on  excess  of  $5,000.   Transfers  less  than  $10,000.  not  taxed. 

Umsle,  aunt,  niece,  nephew  or 
lineal  descendant  of  same. . . 

2%  on  excess  of  $2,000.   Tianefers  leas  than  $5,000.  not  taied. 

Transfers 
less  than 
$500,  no  tax. 

$10,000 
or  lean, 
3%. 

$10,000 
to  $20,000. 
4%. 

$20,000  Over 
to  $50,000,  1  $50,000. 

^tJt^SS^ttn^'^^'^''^^^  Exemptionin3rdclassappliesonly 


«.2i^l/t#°r  ^'"^"jj  Exemption  applies  to  individual  shares.  EaempUon  aimliea  onlv  whmt 
payment  of  tax  would  reduce  amount  of  transfer  below  exemption.  mpim»  only  wbea 


BEPOBT  OF  BOARD  OF  TAX  COMMISSIONERS. 
CALIFORNIA. « 


55 


Classbb. 

R/iTES  AND  Exemptions 

Husband,   wife,   lineal  issue, 
lineal  ancestor  of  decedent, 
adopted   or  aoknowledsed 
child,  lineal  issue  of  either.. . 

$24,000  to  wife  or 
minor  child,  $10,000 
to  others,  no  tax. 

1 

$25,000  or  less,  1%. 

$25,000  to  $50,000, 
2%. 

$50,000  to  $100,000, 
4%. 

$1C0,000  to 
$200,000,  7%. 

1 

$200,000  to 
$500,000,  10%. 

$500,000  to 
$1,000,000,  12%. 

Over  $1,000,000, 
15%. 

Brother,  sister,  descendant  of 
same,  son^n-law  or  daui^ter- 

$2,000.  no  tax. 

3% 

6% 

9% 

12% 

15% 

20% 

25% 

Aunt,   uncle,   descendant  of 

$1,000,  no  tax. 

4% 

8% 

10% 

15% 

20% 

25% 

30% 

$500,  no  tax.!  5% 

10% 

15% 

20% 

25% 

30% 

30% 

Rale  is  on  excess.   Exempti<m  aiH3lies  to  individual  shares.  Exemption  unconditional. 

COLORADO. « 


Father,  mother,  husband,  wife, 
child,  brother,  sister, 
dau£hter>in-law  or  son-in- 
law,  ad(q>ted  m  acknowl- 
edged   relation    of  child, 

$10,000  no  tax. 
If  transfer  does 
not  vest  in  per- 
I>etuity  exemp- 
tion not  allowed. 

$100,000 

or 
less, 
2% 

$100,000 

to 

$200,000, 
3% 

Over 
$200,000, 
4  % 

Unde.  aunt,  niece,  nephew,  or 
EdmI  descendant  of  same. . . 

Transfers  of 
$500  or  less, 
no  tax. 

$20,000 
or 
less. 
3% 

$20,0C0 

to 

$50,000, 
4% 

$50,000 

to 

$100,000. 
6% 

Over 
$100,000, 
6% 

Transfers  of 

$500  or  less, 
no  tax. 

$10,000 
or 
less, 
4% 

$10,0C0 

to 
$20,000, 
5% 

$20,000 
to 

$50,000, 
6% 

$50,000 
to 

$100,000 
8% 

Over 
$100,000, 
10% 

Rate  on  whole  amount  of  transfer.  Exemption  applies  to  individual  shares.  Exempti<Nl  in 
nd  and  3rd  classes  applies  only  when  shares  do  not  exceed  $500. 

.  CONNECTICUT.* 


Fweat,  grand-parent,  husband, 
wife.  lineal  descendant, 
adopted  child,  lineal  descend- 
ant of  same,  adoptive  pannt. 

$10,000. 
no  tax. 

$50,000 
or 
less. 
1% 

$50,000 

to 

$250,000, 
2% 

$250,000, 
to 

$1,000,000, 
8% 

Over 
$1,000,000, 
4% 

Son-in-law  or  daughter-in-law, 
stepchild,  brother  or  sister, 
full  or  half  blood,  descendant 

$3,000. 
no  tax. 

$25,000 
or  less. 
3% 

$25,000  to 
$50,000, 
5% 

$50,000  to 
$250,000. 
6% 

5250,000  to 
$1,000,000, 
7% 

Over 
$1,000,000, 

8% 

$500. 
no  tax. 

$50,000 
or  less. 
6% 

$50,000  to 
$250,000, 
6% 

$250,000  to 
$1,000,000, 
7% 

Over 
$1,000,000, 
8% 

Rate  on  wliole  amount  of  transfer.  Tax  on  net  estate, 
thnefore  $13,500  is  the  greatest  total  exemption  allowed. 


as  whole. 


56  KEPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 


DELAWARE.* 


ClAOSBS. 

RaVBS  AMD  ExKXniONS. 

Father,  mother,  graiidfather, 
grandmother,  wife,  husband, 
ehikl.  adopted  child,  lineal 
OMeendant  of  decedent  

#■ 

Not  taxed. 

Rjpther,  sister,  of  whole  or 
half  blood,  or  dewendant  of 
■aine.  

— i.-   . 

$500,  no  tax. 

Over 
»500, 
1% 

Aunt,  uncle,  or  descendant  of 
same  

$500,  no  tax. 

2% 

Great  aunt,  great  uncle,  or 
descendant  of  same. . . 

S500.  no  tax. 

8% 

5% 

Tax  on  collaterala  only.   Exemption  applies  to  individual  shares.   Exemption  unconditional. 


FLORIDA. 


None. 

Passage  of  act  by  legislature  attempted  in  1913. 

GEORGU.  ♦ 

Father,  mother,  husband,  wife, 
child,       brother,  sistar, 
daughter-in-law,  adopted 
fMiiL  lineal  deaoendsnt  of 

$5,000,  no  tax. 

1%  on  excess. 

AB  othen  

$5,000.  no  tax. 

5%  onoEoess. 

Exemption  applies  to  individual  shares.    Exemption  unconditional. 


IDAHO.* 


Husband,  wife,  lineal  issue, 
lineal  ancestor  of  decedent, 
adopted    or  acknowledged 
child,  lineal  issue  of  same . . . 

$10,000  to  widow  or 
minor  child,  $4,000 
to  others,  no  tax. 

1 

$25,000  or  less,  1%. 

! 

o 

$50,000  to  $100,000, 
2%. 

•»«» 

Over  $500,000,  3%. 

Brother,  sister,  or  descendant 
<rf    same,    son-in-law.  or 
dao^ter-in-law  

$2,000, 

no  tax. 

2H% 

3% 

4>i% 

Aunt,  uncle,  or  descendant  of 
same  

$1,500, 
no  tax. 

4H% 

6% 

9% 

Great  aunt,  great  uncle,  or 
descendant  of  same  

$1,000. 

no  tax.  4% 

6% 

8% 

10% 

12% 

All 

10% 

l2H7c 

l6% 

Rate  is  on  excess.  Exemption  appUeslto  individual  shares.  Exemption  unconditional. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS.  57 


ILLINOIS.  ♦ 


Classbs. 


Rates  ahd  Exemptions. 


Father,  mother,  husband,  wife, 
child,  brother,  sister,  son-in- 
law  or  daughter-in-law, 
adopted  or  acknowledged 
child,  lineal  descendant  of 

$20,000,  no  tax. 

S 

§^ 

Over  $100,000,  2%, 
not  upon  excess. 

Unde,  aunt,  niece,  nephew,  or 
lineal  descendant  of  same. . . 

$2,000, 
no  tax. 

$20,000 
or  less, 
2%. 

Over 
$20,000. 

4%. 
not  upon 
exces3. 

Transfers 
less  than 
$500, 
no  tax. 

$10,000 
or  less. 

3%. 

$10,000 
to 

$20,000, 
4%. 

$20,000 

to 

$50,000, 
5%. 


$50,000 
to 

$100,000. 
6%. 


Over 
$100,000, 
10%. 


to  idbar^leM^than  $5^^™'*'***^  applies  to  individual  shares.   Exemption  in  3rd  class  applies  only 


INDIANA.  * 


Husband,  wife,  Uneal  issue, 
lineal  ancestor,  adopted  or 
admowledged  child,  lineal 

$10,000  to  widow, 
$2,000  to  others, 
no  tax. 

$25,000  or  less,  1%. 

o 

«* 

O 

o 

* 

o 

s 

8 
•» 

a 

fe5 

Si 

•»«» 

Over  $500,000,  3%. 

Brother,  sister,  descendant  of 
same,  son-in-law  or  daughter- 

$500.  no  tax. 

1H% 

2H% 

3% 

3H% 

4H% 

Aunt,  uncle,  descendant  of 

$250.  no  tax. 

3% 

4H%  6% 

7yi% 

9% 

Great  aunt,  gnat  uncle,  de- 
scendant oil  Mune  

$150,  no  tax. 

4% 

6%  8% 

10% 

12% 

$100.  no  tax. 

6% 

7H7o      10%  UH% 

15% 

Rate  is  on  excess.  Exemption  applies  to  individual  sharas.   Exemption  unconditional. 

IOWA.  * 

Husband,  wife,  father,  mother, 
lineal  descendant,  adopted 
child,  lineal  descendant  of 
SUDB  

Not  taxed. 

Estates  ol  $1,000 
or  less,  BO  tax. 

Over 
$1,000, 

5% 

Aliens,  mm-fesidents  of  U.  S 

Estates  of  $1,000 
or  less,  no  tax. 

Over  $1,000.  20%  except  to  brother  or  sister 
of  decedent,  then  10%. 

not  ex^  $i*WO  ^  "  whole,  but  only  when  such  estate  does 

- Britain  ean  be  taxed  only  at  5%  rate  by  decision  of  Iowa  Supreme  Court,  on 
•eeoant  of  OTwrting  trsMj.  ^  . 


5S 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 

KANSAS. « 


RaTM  AMD  EXKMPTIONS. 

Husband,  wife,  lineal  ancestor, 
hneal  descendant,  adopted 
child,  lineal  descendant  of 
aame,  son-in-law  or  daugh  ter- 
itt-law  

Not  taxed. 

Brother,  sister  .... 

+^ 
>i 

s 
S 

«o" 

■ 

First  $25,000  or 
fraction  thereof. 
3%. 

Next  $25,000  or 
fraction  thereof. 
5%. 

Next  $50,000  or 
fraction  thereof. 

Next  $400,000,  or 
fraction  thereof, 
10%. 

If 

All  others  

Leas  than  $200, 
no  tax. 

5% 

7H% 

10% 

12H% 

1«% 

pSST.SSh'dSS^^i^^S^^  property  within  the 


KENTUCKY. 


Father,  moOier.  husband,  wife, 
towful  isBue.  son-in-law  or 
daught8r-ift..law,  adopted 
child,  lineal  descendant  of 
decedent  


Not  taxed. 


^"o****"   $500,  no  tax. 


Over  $500, 


Tax  on  collaterals  only.    Exen4>tion  would  seem  to  ai>ply  to  individaal  sharas. 


LOUISIANA. « 


Oizect  descendants  or  ascend- 

Transfers less 

$10,000  or 

ants  or  surviving  wife  or  hus- 

than $10,000, 

owr. 

band  of  decedent. . 

no  tax. 

2% 

All  others  

No  exemption. 

All  amounts. 
6% 

Exemption  applies  to  individual  shares,  but  only  when  such  shares  are  less  than  $10  000 


REPORT  OP  BOARD  OF  TAX  COMMISSIONERS. 


59 


MAINE.* 


Clasbm. 


RAxm  AJTD  ExntmoMik 


Husband  wife,  lineal  ancestor, 
lineal  descendant.  a4opted 
child,  adoptive  parent,  son-in- 
him  or  dMightar-in>lftir  

$10,000  to  husband, 
wife,  father,  mother, 
child,  adopted  child, 
adoptive  parent,  no 
tax.  $500  to  others, 
no  tax. 

$50,000  or  less.  1%. 

1 

s 

Is? 
B 

Over  $100,000,  2%. 

Brother,  aiater,  uncle,  aimt. 

$600.  no  tax. 

4% 

5% 

$500,  no  tax. 

5% 

6% 

7% 

Exemption  applies  to  individual  shares,  bat  khus  eoorts  tax  upon  entire  amount  if  otw  exenm- 
tattB  ettatM  and  tax  may  be  iqKm  6xoe«  or  noi  m  ooart  irieases. 


MARYLAND. 


Father,  mother,  husband,  wife. 
chUdren,  UamI  deaoendants 

Nottaxsd. 

$500  to  estate 
as  whole, 
no  tax. 

Over  $600. 
6% 

Tu  on  ooDstenk  oalr.  Bxamptian  apfiliM  to  «ttate  as  wlioto. 


BfASSACHUSETTS.* 


Husband,  wife,  lineal  ancestor, 
lineal  descendant,  adopted 
child,  lineal  desoendan^  of 
same,  adoptive  parent,  lineal 
ancestor  of  same,  son-inr4aw 
or  daughter-in4aw  

$10,000  or  less,  to  husband, 
wife,  father,  mother,  child, 
adopted    child,  adoptive 
parent,  no  tax.     $1,000  or 
less  to  others,  no  tax. 

$50,000  or  less.  1%. 

$50,000  to  $250,000.  2%. 

$250,000  to  $1.000.000, 3%. 

Over  $1,000,000,  4%. 

Brother,  sister,  half  or  whole 
blood,  nieoe,  nq;>faew. . . .  . 

K 

II 

$10,000  or 

less.  2%. 

$10,000  to 
$25,000, 

3%. 

$25,000  to 

$50,000. 

5%. 

$50,000  to 

$250,000, 

6%. 

$250,000  to 
$1,000,000, 
7%. 

Over 

$1,000,000, 

8% 

1 

< 

H 

'  $60,000  or 

:  less.  5%. 

'  $50,000  to 
•  $250,000, 
6%. 

$250,000  to 
$1,000,000. 
7%. 

Over 

$1,000,000, 
8%. 

Rate  is  on  exoeas.  Exemption  apphes  to  mdividual  shares,  but  only  when  such  shares  do  not 
exceed  $10,000  or  $1,000,  respectively,  in  class  1,  and  $1,000  in  classes  2  and  3,  but  in  no  event 
mini  tax  reduce  the  share  below  the  exempted  amount;  i.  e.,  $10,001  can  be  taxed  only  $1  00  op 
no  riian  leas  than  $10,101.01  can  be  taxed  at  the  1%  rate,  when  the  transler  is  one  emtitfcrd  to  a 


60 


BEPOBT  OP  BOABD  OF  TAX  COMMISSIONBB8. 

MICHIGAN. « 


CUASSBS. 

Ratb^  AMD  ExMnmcum. 

Grand  parent,  parent,  husband, 
wikj  child,  brother,  sister, 
son-uk-law  or  daughter-in- 
law,  adopted  or  acknowledged 

Transfers  less 
than  $5,000  to 

wife,  less  than 

$2,000  to 
otbuB,  no  tax. 

95.000  or 
ovwto  wife, 
$2,000  or 

over to 
others,  1% 

All  others  

Lbm  than  $100. 
no  tax. 

nooor 

over.  5% 

property  in  cla«  1.  uiaa  «iw  in  dan  a.  Tax  appliaa  only  to  personal 


MINNESOTA. « 


• 

Wife,  lineal  im  

$10,000, 
no  tax. 

$15,000  oi 
less. 
1%. 

'$15,000  to 
$30,000, 

'$30,000  tc 
$50,000. 

s%. 

►'$50,000  tc 
$100,000. 

>  Over 
$100,000, 
3%. 

Hudband,  ad«»»ted  or  aoknowl- 
•dsMl  imS.  fineal  fene  of 

$10,000, 
no  tax. 

2H% 

3% 

m% 

4H% 

T^wi^^l  ancestor 

$3,000. 
no  tax. 

2H% 

3% 

4«% 

Bnitiier.  afeter.  nephew,  niece, 
■an  in  law  ordaoghtaMn^aw. 

$1,000. 
no  tax. 

3% 

4H% 

6% 

9% 

Annt,  uncle,  or  descendant  of 

$250. 
no  tax. 

4% 

6% 

8% 

10% 

12% 

AH  others,  except  as  below  

$100. 
no  tax. 

«% 

7H% 

10% 

16% 

PidiBe  hospital,  educational, 
fultinua  or  charitable  wgan* 
featfooBwit^etato  

$2,500, 
no  tax. 

s% 

S% 

4% 

6% 

•% 

Rate  is  on  excess.   Exemption  appHee  to  indiWdual  ahawfc  Exemption  oneondiliaMl. 


MISSISSIPPI. 


Num. 


No  Tax. 


MISSOURI.* 


Pather,  mother,  husband,  wife, 
adopted  child,  direct  Ktvf>a| 
descendant  of  testator. . . . 

Not  taxed. 

All  others  

No  exemption.^ 

An  amounts. 

5% 

Tax  on  eoHatenls  only.   No  oaemption. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS 


61 


MONTANA. 


CijuMns. 

Rins  AMD  EznanoNB. 

Father,  mother,  husband,  wife, 
child,  brother,  sistar,  son-in- 
law  or  daughter-in-law, 
adopted  or  acknowledged 
child,  lineal  descendant  of 
dseedsnt. 

Estates  less 
than  $7,500, 
no  tax. 

$7,500  or 
over, 
1% 

Estates  less 
than  $500, 
no  tax 

$500  or 

over, 

5% 

Exemption  applies  to  estate  as  whole.  Estates  les^  than  exemption  not  taxed  in  class  1.  Exemp- 
tion iiTdbus  2  applies  tmly  ?rlien  estate  li  less  than  $500.  Intention  seems  to  have  been  to  exempt 
imI  estate  to  direct  heirs,  but  law  exempts  real  .estate  to  all  direct  heirs  except  fether,  mother, 
huriiand  and       and  taxes  them  at  the  ooUatend  rate.  5%. 


NEBRASKA. 


Father,  mother,  husband,  wife. 
cUld.  brother,  rister,  son-in- 
law  or  daughter-in-law, 
adopted  or  acknowledged 
child,   lineal    descendant  of 

$10,000. 
no  tax. 

Over 
$10,000, 

1% 

Uncle,  aunt,  niece,  nephew,  or 
BnMtl descendant  of  same. . . 

$2,000, 
no  tax. 

Over 
$2,000. 
2% 

Transfers 
less  than 
$500, 
no  tax. 

$5,000  or 
2%. 

$5,000  to 
$10,000. 
8%. 

$10,000  to 
$20,000. 
4%. 

$20,000  to 
$50,000. 
6%. 

Ovwr 
$50,000, 
•%. 

Rate  ia  on  excess.  Exemption  applies  to  individual  shares.  Exemption  in  3rd  class  applies  only 
when  slmies  are  leas  than  $500. 


NEVADA. 


Husband,  wife,  lineal  issue. 

lineal  ancestor  of  decedent, 
adopted    or  acknowledged 
ohild,  lineal  issue  of  same. . . 

$20,000  to  widow  or 
minor  child,$10,000, 
to  others,  no  tax. 

$25,000  or  less,  1%. 

$25,000  to  $50,000, 

2%. 

$50,000  to$100,000, 

3%. 

$100,000  to 
$500,000.  4%. 

Over  $500,000,  5%. 

Brother,  sister,  descendant  of 
same,  son-in-law  or  daughter- 

$10,000,  no  tax. 

2% 

4% 

6% 

8% 

10% 

Aunt,  tmele,  dssesndant  of 

$5,000,  no  tax. 

3% 

6% 

9% 

12% 

15% 

Great  aunt,  great  uncle,  de- 

No  exemption. 

4% 

8% 

12% 

18% 

20% 

No  exemption. 

5% 

10% 

15% 

20% 

25% 

Rale  fe  on  exoess.  Exemption  indies  to  individual  4iare«,  Emnpiion  unconditional. 


62 


BSPOBT  OW  BOABD  OF  TAX  CtmMtsuanm^ 
NBW  HAMPSHIBE.* 


Ratks  and  Exemptions. 

Father,  mother,  husband,  wife, 
brother,       sister.  lineal 
meoendant,  adopted  child. 
Bneal  decendant  of  same, 
MB-in^law  or  daushter4n-law. 

Not  taxed. 

5%.   No  exraqilioa. 

Tu  on  coUatenOs  only. 


NEW  JERSEY.* 


HtMbud,  wife,  ehild.  ismie  of 
■UM.  adpiiled  ehikl.  isBue  of 
MOW.  admowledfled  ehild  . . 

$6,000, 
no  tax. 

$50,000 
or  less, 
1%. 

$50,000  to 
$150,000, 

IH%. 

$150,000  to 
$250,000. 
2%. 

CHrer 
$250,000, 
3%. 

Father,  mother,  brother,  sister, 
MO^B-Iawor  daughter-in-law. 

$5,000, 
no  tax. 

2% 

3% 

4% 

AUothen  

Tnmafers 

less  than 
$500,  no  tax. 

8% 

8% 

6% 

wht^siarjTLfh^TSfS?'^  E««ptionia8rddassappUesonly 


NBW  MEXICO. 


Nojo. 


No  Tax. 


NEW  YORK.» 


Father,  mother,  husband,  wife, 
ehild,  bcother,  sister,  son^ii- 
few     or  daughter-in-law, 
•dopted    or  acknowledged 
child.  Imeal  dwnimdant  of  de- 

First 
$5,000, 
no  tax. 

Next 
$50,000 
or  less. 

1%. 

Next 
$250,000 
or  less, 
2%. 

Next 
$1,000,000, 
or  leas, 

8%. 

Any  greater 
amount. 
4%. 

First 

$1,000. 

5% 

6% 

7% 

8% 

BO  tax.  1 

■MPMtively,  under  N.  y.  Supreme  Court  deMuoo.  »i.tfOi.oou  m  aeeond  ebun 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 
NORTH  CAROLINA.  * 


63 


Ratu  AMD  EmfpnoNa. 


||5 

65 

D,000. 

Lineal  issue,  lineal  ancestor, 

husband,  wife,  adopted 
alil]d.   ^ 

1   to  T1 

to 
$2,00< 
no  tax 

or  lest 

to$10< 

$10,000 
$5,000 
child, 
others. 

$25,000 

h 

Brother,  ditar,  deeeendant  of 

No  emnqiCiMi. 

8% 

4% 

NoexM^itton. 

6% 

§1 

8S 


6% 


7% 


6% 


8% 


I 


7% 


9% 


fExcept  grandchildren,  who  have  but  one  exempticm  of  the  child  they  repceoMtt. 
Rate  is  on  excess.   Exemption  applies  to  individual  ahaies.  Exemptkm  aacoDditional. 


NORTH  DAKOTA.* 


Htuband,  wife,  father,  mother, 
Bneal  descendant,  adopted 
child,  lineal  desoendant  of 

$20,000  to  husband 
or  wife,  $10,000  to 
others,  no  tax. 

$100,000  or  less, 
1%. 

$100,000  to 
$250,000,  2%. 

Si 

Over  $500,000,  3%. 

Brother,  sister,  son-in-law  or 

$500,  no  tax. 

825,000 

$25,000 

to 

$50,000, 
2M%. 

$50,000 

to 

$100,000. 
3%. 

$100,000 
to 

8500,000. 
89<%. 

Over 
$500,000, 
4H%. 

Amit,  nnde,  deaoMdaat  of 

No  eiomption. 

8% 

6% 

7H% 

9% 

No  exemption. 

5% 

6% 

9% 

12% 

16% 

Aliens.  corporaticMoa  not  iBOOr- 

No  exemption. 

25% 

26% 

25% 

25% 

25% 

Rate  is  on  exeeee.   Exemption  would  seem  to  apply  to  estate  as  a  uriiole. 


OHIO.« 


Father,  mother,  huaba 
lineal  daaoaMaat, 

Boopiea 

ohild  

Not  taxed. 

$500^  no 

Over  $500, 

6%. 

Collateral  tax  only.  Examptioa  appiisa  to  aetata  aa  whole. 


BBFOBT  OF  BOARD  OF  TAX  COMMIBSIONMBS* 


OKLAHOMA.  • 


Baxm  AMD  Emraoim. 


Father,  mother,  husband,  wife, 
child,  brother,  rister,  son- 
in-law   or  daughter-in-law, 
adopted   or  acknowledged 
^na  

$15,000  to  widow, 
$10,000  to  ohikl, 
$5,000  to  otbera, 
no  tax. 

$25,000 
or  less, 
1%. 

$26,000  to 
$50,000. 

2%. 

$50,000  to 
$100,000. 
8%. 

Over 
$100,000, 
4%. 

t2W,iiotaz. 

5% 

6% 

8% 



Rate  is  on  excess.  Exanqytion  ^;>plies  to  individual  shares.   Exemption  unconditional. 


OREGON.  * 


Gmidfather,  gn&dmother, 
father,  mother,  husband, 
wife,  child,  brother,  sister, 
soii-in^wordaiiiditer>in-law. 
adopted  or  adknowledgea 
child,  lineal  descendant  of 

Transfers  less 
thw  $10,000. 

no  tax. 
U  over  f 10.000. 
$5,000,'  no  tax. 

1%  on  excess. 

Uncle,  aunt,  aieoe.  n^hew, 
&Mdi dsMendant of  same... 

Transfers  less 
than  $5,000, 

no  tax. 
If  over  $5,000, 
$2,000.  no  tax. 

2%  on  excess. 

Transfers  less 
than  $500. 
no  tax. 

$10,000 
or  less. 
3%. 

$10,000  to 
$20,000. 
4%. 

$20,000  to 
$50,000. 
5%. 

Over 
$50,000, 
6%. 

Ibkto  is  on  excess.  Exemptioa  applies  to  individual  shares,  with  additional  exemption  in  entirety 
to  transfers  less  than  $10,000  in  ebis  1.  and  $5,000  in  class  2.  Exemption  in  3rd  ehss  applies  only 
when  shares  are  less  than  $500. 


PENNSYLVANIA. 


Father,  mother,  husband,  wife, 
child,    step-child,  adopted 
ehild,  lineal  descendants  ot 
decedent,  dau|^ter-ui>law. . . 

Not  taxed. 

Transfers  less 
than  $250. 
no  tax. 

$250 
or  over, 
5%. 

Collateral  tax  only.   ExBnq>tion  applies  to  individual  shans,  but  mily  when  such  shares  are  less 

than  $250. 


None. 


RHODE  ISLANP. 

■  ■   '  '  '  '  '  ■ 

Aet  xeoonuquided  by  joint  qwdal  committee  in  1910. 


REPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 
SOUTH  CAROLINA. 


65 


CLA.BSE8. 


Rans  AMU  Exmprnnm. 


None. 


No  tax. 


SOUTH  DAKOTA.* 


tax. 

ess,  1%. 

1 

1 

1100,000, 

CO 

s 

$15,000  or  I 

o 

SIO  000. 

«»«^ 

$30,000 

2%. 

Over  $1( 

Husband,     Hneal  ancestor, 

adopted   or  acknowledged 
child,  lineal  issue  of  same .  .  . 

$10,000  to  all 
but  lineal  ancestor, 
$3,000  to  lineal 
ancestor,  no  tax. 

m% 

2H% 

3% 

3Ji% 

4H% 

Brother,  sister,  descendant  of 
sams,  sonwaw  or  daughter- 

$1,000.  no  tax. 

3% 

6% 

7H% 

»% 

Aunt,  uncle,  deaewidant  of 

$250,  no  tax. 

4% 

6% 

8% 

10% 

12% 

$100,  no  tax. 

5% 

7)4% 

10% 

12H% 

15% 

Rate  is  on  excess.  Exemption  wplies  to  individual  shares.  Exen4>tion  unconditional.  Municipal 
ooiporations  alone  exempt;  $2,500  exemption  allowed  to  hospital,  odonational.  leKgioiM  and 
eharitable  institutions. 


TENNESSEE.* 


Father,  mother,  husband,  wife, 
child,  lineal  desoendants  of 

Estates  less 
than  $10,000, 
no  tax. 

$20,000 

or  less, 

1%. 

Over 

$20,000, 

1J4%. 

E^states  less 

than  $250, 

$250  or  over. 

no  tax. 

5% 

Rate  apparently  is  not  on  excess.  Exemption  applies  to  estate  as  whdb,  but  only  irbmu  entire 
estate  is  tess  than  $10,000  in  class  1,  and  $250  in  class  2. 


BBPOBT  OF  BOABD  OF  lAX.  COlOflSSIONBBS. 

TEXAS.* 


fkllMr,  motiMT.  husband,  wifiw 
(Braek  lineal  dBBemdant  of 

Nottaaed. 

lineal    ascendant,  biolher. 
sister,  lineal  desoendaat  oi 

92,000,  no  tax. 

$2,000  to  $10,000, 

2%. 

$10,000  to  $25,000, 

2K% 

$26,000  to  $60,000, 

3%. 

$50,000  to  $100,000, 

$100,000  to 
$600,000,  4%. 

Over  $600,000,  5%. 

UnelB.  aunt.  IummI  dewmdaat 

si.ooo. 

no  tax. 

3% 

4% 

5% 

6% 

7% 

8% 

$500. 
notes. 

4% 

5H% 

7% 

10% 

12% 

Rate  is  on  excess.  Exemption  anifiMto  iiMtividual  ahareo.  Fixwmption  unoonditional.  Collateral 
and  lineal  ascendant  tax  only. 


UTAH. 


No 


S10.000.  no 


tl6,000or 
8% 


6% 


Exemption  applies  to  whole  estate. 


VERMONT.* 


Ikftber.  mothor.  husband,  wife, 
Bneal  descendant,  step-child, 
adopted  child,  child  of  either. 
aoiMn-lawordaushter^nrbiw. 

Not  taxed. 

No  oaemptioii. 

All  amounts, 
5% 

Collateral  tax  only.  * 

VIBGINIA.« 

Grandfather,  grandmother, 
father,    mother,  husband, 
wife,  brother,  sister,  lineal 

Not  taxed. 

All  otfMOT  

No  coemption. 

All  amounts, 
5% 

CoUataral  tax  only. 


VMPOm  OF  BOABD  OF  TAX  COMMISSIONERS.  67 


WASHINQTON.« 


Riina  AMD  Esonmom. 

Father,  mother,  husband,  wile, 
lineal  descendant,  adopted 
ehnd,  lineal  doaoendant  of 

$10,000,  no  tax. 

1%  on  excess. 

Collateral  heirs  to  and  includ- 
ing tbe  ^  degree  of  relar 

No  exemption. 

$50,000  or 
less, 

3%. 

$50,000  to 
$100,000, 
4M%. 

Over 
$100,000, 
6%. 

No  ademption. 

0%. 

»%. 

12%. 

BateiaoomMfk  BaM^teappHM to oMeaa whole.  Bateof  2&%oikallaBanpaa]ediami. 


WEST  YIBGINIA.* 


Wife,  husband,  child,  lineal 
dn^nffim^tor  lineal  ancestor 


Brotlier,  iirter  (not  half  blood). 
AnoUieni  


Brttiitm  UDOSM    Banmrtioa  ap^iBS  to  individual  shaves.  Exemption  uneonditionaL 


$15,000  to  widow. 
$10,000  to  others, 
no  tax. 

$25,000  or  less,  1%. 

i 

5 

$50,000  to  $100,000, 
2%. 

$100,000  to 
$500,000,  2M%. 

Over  $500,000,  3%. 

No  exemption. 

3% 

4H% 

6% 

7H% 

9% 

No^exemption. 

5% 

1H% 

1  10% 

13H% 

16% 

WISOONSIN.* 


HiMbft"'^,  wife,  lineal  issue, 
lineal  ancestor,  adopted  or 
acknowledged  child,  lineal 

$10,000  to  widow, 
$2,000  to  others,  no 
tax. 

$25,000  or  less.  1%. 

1 

s 

1^ 

8^ 

$50,000  to  $100,000. 
2%. 

*  w 

Si 

Over  $500,000.  3%. 

Brother,  sister,  descendant  of 
same,  son4n-law  or  daughter- 

$500,  no  tax. 

1H% 

2H% 

3% 

ZH% 

4H% 

AunV  onolo*  descendant  of  same 

$250,  no  tax. 

3% 

6% 

7H% 

0% 

Qieat  aunt,  great  uncle,  de- 

S160,  no  tex. 

4% 

«% 

8% 

10% 

12% 

$100,  no  tax. 

5% 

7>i% 

10% 

1«% 

R^tei.  on  excess  Exemption  applies  to  individual  shares,  Exemption  most  oomo  oat  of  first 
$^000.^iS£ii?Sw!^  Bmmption  unconditional. 


68  BEPORT  OF  BOARD  OF  TAX  COMMISSIONERS. 


WYOMING. 


ChkWBB. 

Rates  and  Exbmptionb. 

ntther,  mother,  hiubuid,  wifs, 

ehild,  brother,  sister,  son-in- 
law     or  daughter-in-law, 
adopted    or  acknowledged 
diila.   lineal  descendant  of 

tlO.000. 

BOtML 

Over  $10,000. 
3% 

Transfers  less  than 
9500,  no  tax. 

9500  or  ov«r, 

6% 

J 


EzenavtiQB  appiiw  to  iadividuml  ahaiee.  Eaemption  in  daae  2  aiqitlies  <mly  to  ■hane  kw  than 
$600. 


AT.AairA 


None. 


No  tax. 


DISTRICT  OF  COLUMBIA. 


None. 


Aoi  pawed  Houae  in  1810;  failed  in  Senate. 


HAWAH. 


Famitt  IniiiNuid,  wife,  child, 
traadcMld.  adopted  child. . . 

$6,000,  no  tax. 

2%  on  excess. 

$500,  no  tax. 

5%  Miexeeaa. 

Exemption  appliea  to  individual  shares.  Property  passing  to  class  2  may  also  be  taxed  aa 
ineome  under  inoome  tax  law;  pnverty  paaaing  to  elaaa  1  may  not  be  ao  taxed. 


PORTO  RICO. 


Wife,      child,  grandchild, 
adopted  child  

Not  taxed. 

Husband,  lineal  descendant. . . 

$200,  no  tax. 

$5,000. 

or  less, 

1%. 

$3,000  to 
$20,000, 

$20,000  to 
$50,000, 

2%. 

Over 
$50,000, 
8%. 

$200,  no  tax. 

3%. 

6%. 

9%. 

Rate  is  on  excess.   Exemption  unconditional. 


PHILIPPINE  ISLANDS. 


None. 


No  tax. 


^PTO  OF  TAX  C-'«- 


MOV  1 71994 


